The Financial Select Sector SPDR (ETF) (NYSEARCA:XLF - 16.40) has stretched to a new annual high, and bullish option traders are taking notice. For the second day running, heavy short-term call buying is taking place on the financials-rich instrument, which includes such components as Wells Fargo & Company (NYSE:WFC - 36.46) and JPMorgan Chase & Co. (NYSE:JPM - 41.92).

Overall, the XLF is today's second-most heavily traded name in the options pits. Call volume is currently running at nearly 15 times the expected pace, with 425,000 contracts already changing hands. A whopping 307,000 contracts have changed hands at the October 17 call, which came into the session with open interest of roughly 215,000 contracts.

Three large blocks -- two numbering 99,999 contracts and one comprised of nearly 43,000 options -- traded at or near the ask price of $0.12 shortly after the open. If these were in fact bought to open, it indicates the opinion that the XLF will be trading above the $17 level when these options expire on Oct. 19. Breakeven on the strategy is $17.12, or 4.4% above current levels. Above this mark, gains are theoretically unlimited as long as the option remains open.

Bullishness is the recent inclination among XLF speculators, judging by its Schaeffer's put/call open interest ratio (SOIR) of 0.78, which currently ranks in the sixth annual percentile. In other words, option players have only been more call-skewed 6% of the time during the past year.