Cavium, Inc. (CAVM) Milestone Brings Bulls Out of Hiding

Cavium Inc (NASDAQ:CAVM) has rallied 7% this afternoon to trade at $67.26, after earlier touching a record high of $67.56. Although there appears to be no catalyst for today's pop, options traders are eyeing more upside through week's end.

Taking a quick step back, calls are trading at nine times what's typically seen at this point in the day, and CAVM's February 65 strike has garnered the most attention. Signs suggest a number of positions are being bought to open, as speculators roll the dice on the stock extending its lead past the $65 mark through Friday's close, when front-month options expire.

Similar to sector peer Micron Technology, Inc. (NASDAQ:MU), though, the withstanding trend in CAVM's options pits has tended toward long puts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.61 ranks higher than 71% of similar readings taken in the past year. In other words, puts have been bought to open over calls at a faster-than-usual clip.

On the charts, however, CAVM has been a long-term outperformer, boasting a 67% year-over-year lead. As such, it's possible some of the recent put buying may protective in nature, as Cavium Inc (NASDAQ:CAVM) shareholders look to guard paper profits against an unexpected decline.