Fannie (FNM, news, chart) is seeing active trading. After hitting a low of $6.79 in early trading, shares are down 95 cents to $7.00 after the Financial Times reported the Bank of China has reduced its portfolio of agency debt by $4.6 billion, which could be a sign that foreign investors are growing more nervous about holding Fannie and Freddie’s bonds and guaranteed securities. Freddie Mac (FRE) is trading down 70 cents to $4.58. Yet, in the options market, sentiment isn’t nearly as bearish as one might expect given the declines in Freddie and Fannie shares on Friday. In FNM, for example, 60,000 calls and 23,000 puts have traded on the day. The December 15 calls are the most actives. 21,100 contracts have traded, compared to open interest of 15,446. In addition, 73 percent of the volume in those calls is trading offerside. In short, it appears that some traders are stepping in to buy call options on today’s weakness and seem to expect the recent rebound to continue from now until yearend. FNM is up 40 percent on the week. FRE gained 63 percent.

Volume is picking up in NVidia (NVDA, news, chart). Shares are down 46 cents to $12.68 and the September 15 calls are the most actvives. 10,265 have traded, with 95 percent trading offerside. No news on the chipmaker today. The company is due to present at the Kaufman Brothers Investor Conference on September 3, the Citigroup Global Technology Conference on September 4, and the Deutsche Bank Technology Conference on September 9th.

Applied Materials (AMAT, news, chart) call options are active Friday morning. 17,000 contracts have traded, compared to 3,300 puts. The October 19s are the most actives. 10,000 have traded, including a block of 5,000 contracts traded mid market for 70 cents a contract. Outside of that, today’s volume in the those calls seems to be predominantly buying, and coming in orders of fewer than 1,000 contracts. Another 5,500 of the September 19s. With shares trading for $18.34, this is possibly speculative call buying and positioning for a move higher in the semiconductor equipment maker, but some of the volume is possibly closing trades as well. There is no news on Applied Materials today. The company is due to present at a Citigroup Global Technology Conference on September 3rd.

Clean Energy Fuels Corp (CLNE, news, chart) with notably bullish call option volume this morning. Shares are up 42 cents, or 2.15%, to $17.09 and buyers of September 17.5 calls surfaced, paying 80 cents for more than 1000 contracts. In total, nearly 3000 calls have traded so far, and just 218 puts. Implied volatility has lifted several points–unusual going into a long weekend.

Similar to VLO flow, Sunoco (SUN, news, chart) is seeing bullish options activity ahead of the next Tuesday’s presentation at a Lehman Energy conference. Option flow is triple recent average levels and dominated by buyers of Sep 45 Calls and sellers of Sep 40 Puts for a 10 cent net debit. Stock is up 1% to $42.65 and these buyers are establishing a trade profile that costs very little up front and gives the upside and downside exposure for a move through either strike.

Valero (VLO, news, chart) is seeing bullish order flow. The stock is up 15 cents to $35.17 and has been moving higher with other refiners after data released Wednesday showed more production, inputs and utilization for refiners compared to the previous week’s average. Shares of Valero are up nearly 5 percent since Tuesday. In the options market, sentiment seems bullish early Friday. 7,300 VLO calls have already traded, compared to 570 put options. Most of the action is in the September 36 calls, where a series of orders have been trading offerside between $1.33 and $1.35 a contract during the first thirty minutes of trade. 5,000 contracts have traded.

Seeing early interest in Tivo (TIVO, news, chart) puts, which seems to be a continuation of bearish action highlighted yesterday at 15:20 Eastern time. Thursday, 12,000 TIVO puts traded, compared to 3,300 calls. Open interest in the September 7.5 puts increased by 3,079, the October 7.5s saw open interest increase by 2,940 contracts and the September 10s, by another 1,500. Today, Shares are down 2 cents to $8.29 and volume is picking up in the September 5 puts, with 5,000 contracts traded. A block of 4,688 contracts recently traded on the offer, for a nickel. Open interest is just 1 contract, suggesting an opening buy order. TIVO moved up 4.4 percent on the heels of its earnings report yesterday. The company is due to present at a Kaufman Bros. Investor Conference on September 3.

Early bullish volume in Novell (NOVL, news, chart) this morning with repeat buying in Sep 5 Calls. Shares are trading up 24 cents, or 3.8 percent, to $6.25 after the software maker reported quarterly earnings of 6 cents a share, which topped analyst estimates by a penny.

Why S&P Likes Wal-Mart and Best Buy

Lockheed Martin (LMT, news, chart) saw bullish trading as the stock touched a new 52-week high Thursday. Shares traded up 3.2 percent to $119.59. In the options market, volume ran three times the usual, with 5,300 LMT puts and 1,900 calls traded on the day. The two largest trades included an order for 1,525 LMT December 120 puts traded bidside for $6.70 and an order for 1,525 LMT December 100 puts traded offerside for $1.35. Both traded on the AMEX shortly after 15:30 Eastern time.

Open interest in both contracts increased by more than 1,500 contracts. Consequently, the volume appears to be part of a bull put spread, where the strategist is selling the 120s and buying an equal number of 100s. If so, this investor is probably trying to capture the net premium of $5.35 per spread and hopes LMT will stay above $120 betwen now and December options expiration. The risk from the spread is from a move lower in shares. If LMT falls to $100 or less, the strategist stands to lose $14.65 per spread.