Bullish Or Cheap?

Some bright signs emerging in option land recently.

Yesterday, an investor went out and gobbled up 100,000 contracts of the XLF July 12-strike calls ahead of Goldman's earnings. Meredith Whitney may have taken the wind out of that trade by upgrading the bank ahead of what were fantastic earnings this morning.

Keep up to date on all your earnings on CNBC.com's Earnings Central

But in a separate trade today, another investor bought 200,000 contracts of the SPY August 100-strike calls, more of less betting that the S&P will break 1000 before the third week in August.

If such high hopes actually happen, the Veuve Clicquot will indeed be flowing. But before we start booking tables at Georgica, or begging the powers that be to reopen Fiamma, perhaps we should take a step back and think about what all this call buying means.

Is our national banking crisis is over? Are the capital markets back to normal?

I don't know. But one likely scenario could be that those XFL call options are downright inexpensive, especially with expiration just a couple days away.

"They're cheap on a dollar basis, so if you want to make a bullish bet on the XLF, you're not committing a lot of money relative to the stock," said Mike Khouw, who not only runs Cantor's equity derivatives business, but now talks in a TV staccato wherever he goes. "So it's either a leveraged bet to the upside, or an inexpensive way to get exposure."

With Bank of America, JPMorgan and Citigroup all reporting earnings this week, the XLF might be the most efficient way to get exposure to those specific stocks. After all, they comprise nearly a quarter of the index.

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So perhaps options traders are more cheap than bullish.

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