Earlier today I noted the upbeat comments from Hartford Financial Services (HIG). A check of the current quote shows the market liked what it heard as the stock is surging over 80%. That gain appears to have caught the attention of call traders. The table below was pulled from our option chain page and shows some of the activity for the December series.

Here we have the front-month options that are closest to the stock price. I have bolded the situations where today's volume is approaching (or exceeding) current open interest. As you can see, the bulk of the activity is on the call side.

My first thought was that some of this might be call sellers looking to sell some inflated premium and I am sure some of that is going. However, the interesting aspect is that the premium isn't as inflated as I would have thought. If you check out our implied volatilities page it shows we headed into today with a 1-month historical volatility of 269%. After today's pop, my quote screen now shows the stock with near-term historical volatility of around 350%. However, I am currently showing the December 12.50 call at an implied volatility of "only" 200%. This would seem to suggest the options aren't too crazily out of line with historical volatility.

To put today's move in perspective, we can start with the daily chart...

Chart Courtesy of Thomson Financial

Here we see the horrific downtrend that has been in place since September. Even after today's 80% rally, the stock is still sharply lower compared to where it stood a few months ago. In order to gauge levels to watch, the intraday chart can help us. Here we have a 30-minute bar chart that shows the action for the last 20 days.

Chart Courtesy of Thomson Financial

Here we see the recent bottom near 5. That was followed by a short rally and then a small pullback/consolidation. The area near 14 should prove the next challenge for the shares. This was the site of the mid-November "mini peak." Meanwhile, the area near 9 should offer support.