Bare Escentuals (BARE) is seening unusual activity ahead of an earnings report due out tomorrow after the closing bell. The stock has been under pressure for the past hour or so and, after hitting an intraday high of $24.18, BARE is now down $1.00 to $23.00 a share. The May 20 puts saw a noticable uptick in activity just before the intra-day selloff. Two blocks of 6,900 and 3,990 contracts traded for 50 cents on the ISE. After its last earnings report, on February 26, the stock rallied from $26.18 to $28.69 on the 27th, but has been trading lower since that time.

Seeing buying interest picking up in the CBOE Volatility Index (.VIX) June 25 calls, with ten orders averaging 430 contracts coming through at 95 cents a contract between 13:11 and 13:15. Trading is cautious ahead of the FOMC announcement due out at 14:15. 80 percent odds of a 25 basis point cut and 20 percent for no change in policy. Market pricing in only a 25 percent chance of a June cut. VIX sits unchanged at 20.24.

QLogic (QLGC) May 15 and May 17.5 calls are seeing a sudden increase in buying interest ahead of an earnings report due out after the close of trading tomorrow. Total volume is running three times usual, with sentiment 90 percent bullish. Shares are down 48 cents to $16.99 after Caris downgraded the stock to Average from Above Average. Firm expects QLogic to rerport in-line or better than expected results based on channel checks, but says IBM and Sun had weak QLogic related server businesses. Valuation premiums relative to peers also prompted the downgrade.

Strangled. Cigna (CI) options are active today ahead of an earning report due out tomorrow morning before the opening bell. The June 45 calls and June 40 puts are the most actives. An order for 2,000 of the June 45 calls recently traded for $1.82. 4,000 of the June 40 puts traded for $1.15. This appears to be strangle buying and a play on some possible post-earnings volatility in CI. Implied volatility of the June options is in the mid and upper 30s, compared to the mid and upper 40s for the May contract.

Seeing some buying interest in the US Oil Fund (USO) puts ahead of weekly inventorty data due out at 10:30. The July 87s are the most actives. 3,400 contracts have traded, with 100 percent hitting the offer. With crude up 54 cents to $116.17 a barrel, the US Oil Fund is up 55 cents to $93.54 a share ahead of the data. Analysts expect the report to show crude oil inventories with a build of 900,000 barrels in the week ended April 25th. Distillate fuels and gasoline inventories are expected to show draws, of 250,000 and 875,000, respectively.

The CBOE Volatility Index (.VIX) is up .41 to 20.05 ahead of important event risk Wednesday through Friday. Tomorrow morning’s GDP report along with ADP’s early look at the April jobs situation could add a bit of volatility in early action and then, after the usual wait and see ahead of the Fed announcement, things could get rocky again tomorrow afternoon. Yet, while it is difficult to predict how the financial markets will react, there is at least one reason why the VIX might ease once the event risk has passed. Actual levels of market volatility have been falling. The six-day Statistical Volatility [SV] of the S&P 500, for instance, has fallen back to 9.3 percent, less than half the VIX. The 20-day is 18.8 percent and the 100-day is 22.3 percent.

Capital One (COF) puts are seeing action today. In all, more than 47,000 contracts have traded, compared to 4,900 call options. Today’s action included an order of 9,500 June 50 puts at the ask and 19,000 of the June 40s on the bid. The action seems to be part of a bearish spread and a bet that the stock will make a move lower, but not necessarily below $40.00 a share.

The US Oil Fund (USO) is down $2.64 to $93.05 a share and USO put volume is outpacing call volume by a ratio of six-to-one. Todays action included the purhcase of 3,000 of the June 90/80 bear put spreads. (see /color USO for details). The fund is under pressure as crude oil slips $3.39 to its lows of the trading session ($115.36 a barrel). Gold is down $18.80 to $876.70 an ounce.

Anheuser Busch (BUD) June 55 and 50 calls are seeing some interest today. Total volume is running three times usual, with 11,000 calls and 1,884 puts trading on the day. Directional sentiment measured by todays action is 61 percent bullish. The stock is up for a second day, adding 4.5 percent since Friday, and breaking to its best levels since January. The company reported earnings on April 23rd and there has been no other company specific news since that time.

The iShares MSCI Japan Fund (EWJ) is seeing four times its normal trading volume after a player bought 20,000 of the June 14 calls for 20 cents a contract. EWJ was recently down 5 cents to $13.29. Markets in Japan are closed today for holiday and trading across the Asia/Pacific was mixed; with strength in Hong Kong and China, but weakness in South Korea, Singapore and Taiwan.