Terra Industries (TRA, news, chart) is seeing bearish spread trading as shares fall along with other agriculutral stocks. The move seems to be part of a sell off in commodity stocks in general (metals, mining, oil, coal) and comes ahead of weekly USDA crop reports due out this afternoon. In midday trading, TRA is getting hit for a 10 percent loss and, in the options market, 24,000 puts have traded, compared to 4,000 call options. The top two trades include an order for 10,000 December 40 puts and another 10,000 December 30s trading on the PHLX at approximately 12:45.

Souces on the exchange tell WhatsTrading.com that the action is part of a substantial bear put spread, where the strategist bought the 40s and sold the 30s for a net debit of $2.60. If so, it is a big bet that TRA will continue today’s slide and has a maximum payoff potential of $7.40 if the stock falls to $30 or less by December options expiration.

Marvell Technology (MRVL, news, chart) saw bullish spread trading Monday. Shortly after noon Eastern time, an order for 2,500 MRVL Feb 12.5 calls traded askside for $3.36 a contract and, at the same time, the same number of February 20 calls traded offerside for 66 cents a contract. With open interest of 520 and 445 in these two contracts, respectively, the action has all of the signs of a call spread buying. If so, the strategist is looking for a significant move higher in MRVL. They are risking $2.70 for a potential payoff of $5.80 should MRVL rally back to $20.00 a share by February. MRVL is down 34 cents to $14.35. Earnings due out August 28.

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The US Oil Fund (USO) is down $4.19 to $96.85 on the heels of a dramatic reversal in crude oil prices. Crude is trading down $5.20 to $119.90 a barrel on talk tropical storm Edouardo is not affecting Gulf oil stations. The move lower in crude clearly gave the major averages a lift and, after falling more than 100 points in morning trade, the Dow Jones Industrials briefly poked back into positive territory. USO is falling through all kinds of support areas and back to levels not seen since early May.

Motorola (MOT, news, chart) is seeing a noticeable increase in investor interest Monday morning. Shares are trading up 83 cents to $9.64 and volume in the options market is twice the normal. 43,000 call options have already traded, compared to 9,000 puts. There has been a clear uptick in buying of August, September, and October calls during the past hour or so, and as the stock rallied to sessin highs of $9.94. Qualcomm (QCOM) announced today that Sanjay Jha, chief operating officer and president of Qualcomm CDMA Technologies, is leaving to become co-CEO of Motorola. Also hearing talk about a possible broker upgrade of MOT to Buy.

The SPDR S&P Metals & Mining Fund (XME) is seeing active trading. The fund, which holds 24 companies including Alcoa (AA), Freeport McMoran (FCX), and Peabody Energy (BTU), is down $2.82 to $73.43 and volume in the options market is running four times the usual. Metals and mining companies are lower as spot prices moved lower in early trading. Gold is down $3.00 to $91.450 an ounce. Other commodities, such as crude oil, coal, and and silver are also lower. In the options market, sentiment towards the XME is decisively bearish, with 32,000 puts and only 122 call options trading Monday morning. The top two trades include an order of 18.583 August 67 puts trading offerside for $1.05 a contract and an order of 7,634 September 62 puts for $1.82. It looks like some investors are looking for some protection from a nother round of selling in shares of metals and mining companies.

Notable bearish activity in this ETF designed to track Emerging Market performance. Shares down 2% near 41.55 and aggressive put buyers lifted more than 4500 March 40 Puts for $3.45, after earlier lifting several thousand 40 strike puts in December and January expirations. Within the first 45minutes of trading we have more than 12,000 puts on the tape and just over 1000 calls for a put/call of nearly 12, versus usual ratio closer to 2. Nearly 80% of the put activity offerside, and iv up several points. Flow suggests one or more large accounts looking for downside potential in this segment, with a priority in quickly establishing this bearish position.

Lear Corp. (LEA, news, chart) is seeing bullish order flow early. The stock is down 21 cents to $13.65 and volume in the options market is running four times the usual. 3,070 calls have traded, compared to just 10 puts. The December 17.5s are the most actives, with 2,490 contracts traded and 92 percent traidng offerside. Buying also seen in the December 20s, January 17.5s and 20s. Nothing new on LEA today. Earnings were reported last week.

Lam Research (LRCX, news, chart) is seeing unusual action. The stock is up 82 cents to $33.42 and volume in the options market is running three times the usual. A total of 11,000 LRCX puts have traded, compared to 106 calls. However, sentiment is bullish, as most of today’s volume is put selling. For example, an order of 7,500 of the Sep 30s traded bidside at 9:55. With open interest of 12,308, today’s action might be sell to close orders.

Vertex Pharmaceuticals (VRTX, news, chart) is trading down 10 percent and volume in the options market is running double the usual. The action comes despite no company specific news, but seems to be related to results from Schering Plough’s Phase II study of boceprevir, an investigational oral hepatitis C protease inhibitor, which is also a competitor to VRTX’s teleprevir. Schering says analysis showed a high rate of sustained virologic response in patients receiving boceprevir. Vertex’s Telaprevir is in Phase III trials and the stock has reacted negatively in the past to boceprevir study news. In the options market, sentiment seems more upbeat, however. Although put volume is dominating today’s trading, most of the action is put selling. The Sep 25s, the most actives, are seeing 65 percent trading bidside. The August 25s and Sep 30s are seeing 100 percent of today’s volume on the bid. Directional sentiment based on early order flow in VRTX is 71 percent bullish.

The Chicago Board Options Exchange [CBOE] launched a new index to track volatility in the gold markets Friday. The CBOE Gold Volatility Index (.GVZ) tracks the 30-day volatility of SPDR Gold Trust (GLD) options. The benchmark is similar to the widely watched CBOE Volatility Index (.VIX), but is not yet tradable. Instead, GVZ offers a gauge of expected volatility for the precious metal, which, after hitting record highs of $1,030.80 earlier in the year, is trading around $910 an ounce. The launch of the new index comes just two weeks after the CBOE announced volume records in GLD options.