Compaq ( CPQ) bulls charged the options market this morning, buying a whopping amount of calls as the stock gapped higher.

Volatility Index
Today % Change
27.73 -5.10
Source: ILX

As shares of the computer maker soared $2.60, or 13%, to $22.67, traders snapped up the Compaq March 22 1/2 calls as volume on that option skyrocketed. Prices for the options also jumped sharply.

Nasdaq Volatility Index
Today % Change
69.54 -4.46
Source: ILX

Volume for the March 22 1/2 calls was heaviest as more than 28,500 contracts changed hands, with action on the Chicago Board Options Exchange and the American Stock Exchange accounting for about 25,000 of those contracts. Open interest (the total number of options contracts that have not been exercised or allowed to expire) as of Monday's close was just 6191 contracts, indicating that today's trading was the initiation of new positions at that strike price.

On the CBOE, the calls soared 85 cents ($85 per contract) to 1.10 ($110) on volume of nearly 13,000 contracts.

There was also a decent chunk of volume on the Philadelphia Stock Exchange, where more than 3500 of the March 22 1/2 calls traded.

Traders pushed their time horizon out a little further this morning, too. On the Pacific Exchange, volume in the April 22 1/2 calls also jumped sharply, with more than 10,000 contracts trading, compared to open interest of 6,845. Prices for the calls hopped 1.15 ($115) to 2.15 ($215).

Compaq's stock has enjoyed a nice run so far this year especially considering the carnage visited upon the tech sector. As of yesterday's close, Compaq was up 34% year-to-date.

Paul Foster of 1010WallStreet.com in Chicago, noted that the implied volatility (a key component of an option's price and the market's estimate of how much the underlying security can move) on the April 22 1/2 calls went out last night at 60 and went up to 71-72 this morning, a significant jump. Implied volatility generally moves higher when there's a lot of demand to buy options.

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