Call traders betting on a bounce for Hartford Financial Services

On Monday, traders on the International Securities Exchange (ISE) bought to open 10,309 calls on HIG, compared to just 592 puts. In other words, bullish bets were more than 17 times more popular than their bearish counterparts. Yesterday's action simply extended a trend toward calls; looking back over the past 10 days, the equity has racked up an ISE call/put volume ratio of 2.89.

Peak call open interest in the March series lies at the 5 strike, with 21,071 contracts in residence. It's interesting that traders have set their sights on the 5 level -- this region was home to HIG's November 2008 lows, but the shares recently endured their first weekly close south of this strike.

The gains from today's relief rally notwithstanding, the 5 level could become a challenging technical obstacle for the stock. Not only is it the site of former support, but the glut of open call contracts here could exert options-related resistance as the expiration of March-dated contracts approaches.

In fairness, HIG can't possibly go much lower on the charts. However, judging by the stiff technical and fundamental headwinds facing the security, it might be too soon to bet on a meaningful rebound.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.