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Oil Services HOLDRS

By Chris McKhann, analyst at OptionMonster.

As crude appears to be entering the early stages of a recovery, the oil services ETF is up 7.5% and seeing call buying.

The Oil Services HOLDRS exchange traded fund (OIH Quote) is up to $79.28 in afternoon trading as it pushes toward resistance after bouncing off recent lows. The ETF, which includes refineries and other oil service companies, hit a 52-week low of $60.96 on Dec. 5 after plummeting from a high of $228.75 back in July.

Banking on further gains, traders are buying the February 90 calls, as more than 7,000 of those have changed hands against open interest of 1,094, according to optionMONSTER's tracking systems. Those calls have risen from $1.90 to $2.90 as the OIH has pushed higher.

This trade is a bet that OIH will rise above 93 by that February expiration. The ETF last saw those levels back in early November. The implied volatility is 63%, down from levels around 100 and at its lowest level since late September. The 30-day historical volatility remains high at 103%, but the 10-day level, at 67, is more in line.