Option traders were treated to an unusually active end of summer. According to the Options Clearing Corp., option volume during the week before Labor Day, usually among the lightest of the year, saw 28.7 million contracts trade, or some 5.6 million contracts a day. That's a 39% increase over the same week a year ago and greater than the year-to-date average daily volume of 5.5 million contracts.Typically an increase in volume is interpreted as a bullish indicator, as more interest, more speculation and more liquidity are necessary to drive and sustain higher prices. But despite last week's surprising surge in volume, recent option activity is not presenting an entirely bullish picture. In fact, the last two sessions, in which we are supposed to see a post-Labor day pick-up, have seen a decline in trading volume, suggesting a lack of commitment from investors. First, it's important to realize that much of the year-over-year increase in option volume comes from the proliferation of exchange-traded funds, the increase in hedge fund activity (which tends to be non-directional) and the increased adoption of strategies utilizing options to reduce risk rather than committing new money to the market. During the last seven trading days, the equity-only put/call ratio's 10-day moving average has climbed to 0.67 from 0.59, suggesting recent activity is protective rather than speculative in nature. More telling is that the put/call ratio on index products has held steady at a protective 1.56, which indicates that institutions are buying broad market protection even as stocks have rallied. This protective position has been especially evident in small-cap issues. For example, over the last week the Russell 2000 iShares ( IWM) has seen a dramatic increase in put option open interest, sending its put/call ratio to 2.89, its highest level in six months. From a contrarian point of view, this should be constructive, as it points to an underlying distrust or worry about stocks ability to move higher.