Cisco Systems, Inc. (NASDAQ:CSCO - 16.69) saw a flurry of call activity on Monday, as roughly 95,000 of these contracts changed hands -- more than double the equity's expected intraday volume, and nearly twice the number of puts traded. Garnering the most attention was the weekly 17 strike, where north of 20,800 calls were exchanged. About three-quarters crossed at the ask price, pointing to buyer-driven volume. With implied volatility rising 8.7%, and open interest soaring by 18,078 contracts overnight, it can be assumed that most of the volume consisted of new positions. By purchasing these calls -- which traded at a volume-weighted average price (VWAP) of $0.09 -- to open, traders are counting on the stock to surmount $17.09 (strike plus premium paid) by this Friday's close.

However, nipping at the weekly calls' heels was the near-the-money August 17 strike, where nearly 18,800 calls were traded -- about half of them at the bid price, suggesting they were sold. This strike saw an overnight rise in open interest of 6,453 contracts, while implied volatility increased by 5.7%, underscoring our theory of new positions. In this scenario, front-month traders are betting on the stock to remain pinned beneath the $17 mark through August expiration -- rendering the options worthless, and allowing them to pocket the premium, which was likely somewhere in the ballpark of the VWAP of $0.04.

This uptick in call activity is hardly unusual for the tech concern, as data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 3.55. In other words, traders have bought to open more than three calls for every put during the past two weeks. This ratio arrives in the 71st percentile of its annual range, confirming that traders have been scooping up bullish options over bearish at an accelerated clip.

Meanwhile, CSCO seems to be a favorite among the brokerage bunch. Currently, the stock boasts 16 "strong buys" and one "buy" recommendation, compared to 13 "holds" and not a single "sell" suggestion to be found. What's more, the equity's average 12-month target -- according to Thomson Reuters -- checks in at $21.04, representing expected upside of about 26% to Monday's closing price of $16.69.

From a technical standpoint, CSCO has swallowed a loss of close to 8% year-to-date, and has trailed the broader S&P 500 Index (SPX) by about five percentage points during the last 40 sessions. However, the stock is currently trading atop its 10-week moving average, a trendline that has not been surmounted on a weekly closing basis since early April.

It should also be noted that CSCO is on tap to report quarterly earnings on Aug. 15 -- just two days before front-month expiration -- and has bested analysts' bottom-line projections in each of the past four quarters. Should the company top Wall Street's projections yet again, yesterday's call sellers could end up scrambling to exit their bearish positions.