By Jud Pyle, CFA, chief investment strategist for the Options News Network

Alcoa

(AA) - Get Report

saw significant call-buying activity throughout the last three sessions, and we saw open interest on the Jan. 15 calls increase each day.

Nearly 28,000 Jan. 2010 15 calls changed hands yesterday, vs. open interest of 45,000 contracts. During trading yesterday morning, an investor bought 25,000 of these options for 98 cents per contract, meaning the investor needs AA shares to expire higher than $25.98 at the beginning of next year to make money. Implied volatility for these calls is 58.1, according to

ONN.tv's

"Sidewinder" report.

On Tuesday, when the investor started buying these calls, the open interest of the Jan. 15 calls was 25,000 contracts. We saw more than 21,000 Jan. 15 calls trade with a volume-weighted average price of approximately $1.15. Investors who bought these calls need AA stock to expire higher than $16.15.

Current open interest in the Jan. 15 calls is 68,000 contracts. Open interest on these calls almost doubled from Tuesday to Wednesday and skyrocketed for a third straight day, suggesting increased bullishness in AA. The stock has rallied more than 130% since reaching a 52-week low of $5.26 on March 6, but these shares remain 62% off their 52-week high of $32.40. Shares were recently trading at $12.39.

The heavy call-buying that we've seen over the last few days does not mean investors should run out and buy AA shares. But it is notable that some bullish investors are betting on more upside in AA over the next five months.

Jud Pyle is the chief investment strategist for Options News Network (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."