News that British telecom Virgin Media Inc. (NASDAQ:VMED – 45.02) was in talks to potentially merge with European counterpart Liberty Global, Inc. (NASDAQ:LBTYA) sent bullish option traders scurrying to pick up calls on the entertainment/telephony/Internetcompany this morning. Overall, approximately 15,000 calls have crossed the tape -- about 28 times the norm -- versus the expected intraday call volume of just over 500 contracts.

Most popular for VMED has been the February 45 call, where more than 5,000 contracts have traded. The majority of those were bought at the ask price, and implied volatility ticked up, indicating at least some of these calls were bought to open. With a volume-weighted average price (VWAP) of $1.50, the stock would need to be at $46.50 by the close on Feb. 15 to be profitable -- reflecting a 3.3% premium over the current trading level. The only risk is the premium paid if the stock doesn't reach that level by front-month expiration.

VMED shares spiked more than 16% immediately this morning on the wake of the news and reached a new 12-month high, helping continue a technical trend upward. Overall, the stock is up nearly 58% year-over-year, and has more than doubled since hitting its 12-month low of $21.25 last May. VMED also has beaten the S&P 500 Index (SPX) by nearly 13 percentage points over the last three months.

While today's call volume is unusually high, it continues a recent trend toward bullish bets on VMED. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VMED's 10-day call/put volume ratio stands at 2.29, meaning that traders are picking up more than double the amount of calls as puts over the last two weeks. This ratio ranks higher than 69% of other such readings taken within the past year, reflecting a stronger-than-usual preference for calls over puts.