Could it really be time to buy puts?

Yes. No. Maybe.

It's that kind of certainty that's keeping options traders stocking up on calls during this rally but not quite sure if they're ready to spend precious capital on something as imprudent as protection.

The equity put/call ratio at midday was 0.38, reflecting that for every 38 puts that traded, 100 calls crossed the transom. The index put/call ratio, which normally shows more puts than calls trading, was down to 0.65 halfway through the session.

With the Dow headed squarely for 10,000, the sentiment among money managers is to stay fully invested for fear of missing a continued rally and losing clients and their assets. That feeling also is muting put volume, as the longs stay busy in oil and oil-services stock as well as some of the favorite tech names, according to one major East Coast institutional options pro.

The interest in the sectors -- which had been the province of the shorts for the past year -- may be the best example of the bullishness present in the market. Some pros had expected the sector's rally to be a rest stop on the road of sector rotation, but its sustainability has proven them wrong.

One New York trader says some of his clients have been sniffing around the

American Stock Exchange's

oil and gas index, in addition to the Philadelphia Oil Services Index. "There's a little more emphasis on that sector, and people are still trying to get long," the trader says, before adding a caveat.

"These are all

pro traders in those names. That whole rally can get swatted real quick," he says. "It's a sector that's done numerous head fakes in the past but if the commodity can hold up, there's a real story there for the market."

Capitalizing on its popularity as a proxy for the sector,

Schlumberger

(SLB) - Get Report

recorded another strong day. More than 3,600 of its out-of-the-money April 60 calls traded, volume that took the price up 1 3/8 ($137.50) to 2 1/2 ($250).

Yet, there was a smattering of put buying in Schlumberger and some traders thought that it could be time to look at the possibilities.

Out on the West Coast, Strome & Co. options strategist Kyle Rosen says with options volatility collapsing -- the Volatility Index is around 25 compared with 31 a month ago -- put prices are low enough that a purchase could be justified, even in this heady cycle. A key occurrence in this cycle is the combination of the market's rally and the slide in volatility, two factors that serve to take a substantial bite out of put premiums.

"A few weeks ago, we couldn't find any bulls, and now the valuations are off the charts and options volatility has collapsed," he says. "It's an interesting time to start buying puts three to six months out."

Yet Rosen isn't jumping in with both feet. "I'd ease into it," he says. "There could be another 5% in this market and even more volatility could come out."

Another idea Rosen has is to sell LEAPS calls (long-term options) against long stock positions. "There's so much time premium in LEAPS that there's no chance they'll be exercised. In that case, you don't have to worry about the short-term movement," he says.