DryShips (DRYS, news, chart, volatility) is up $1.50 to $22.80 and call volume is picking up. The action appears to be in reaction to unsubstantiated talk the company could go private. November 25 and January 35 calls are being bought. The action comes a day after a player opened a substantial bullish spread on DRYS, apparently buying 5,000 December 20 calls, selling 7,500 December 30 calls, and also selling 7,500 December 15 puts.

Call volume in Progress Energy (PGN, news, chart, volatility) rose to eight times the usual Tuesday, with 3,400 contracts traded. The January 45 calls topped the most actives list. Data suggests investors bought these calls to close for 60 cents a contract. At the same time, sellers surfaced in the January 40s and, taken together, the action suggests some traders might be looking for the stock to stay in a range and not too far from current levels. After gaining 66 cents to $40.53 Tuesday, shares of the Raleigh, North Carolina-based utility company are down $1.03 to $39.50 Wednesday morning.

NVidia (NVDA, news, chart, volatility) calls are seeing early buying interest ahead of an earnings report due out Thursday after market. The stock is down 29 cents to $8.69 after FTN Midwest (?) downgraded the stock to Sell from Neutral. Amtech analysts are also out with cautious comments ahead of the earnings, saying it expects a number of headwinds to affect both results and guidance. Sentiment in the options market seems a lot more bullish, however, with active buying seen in the November and December 10 call options early in the day.

Qualcomm (QCOM, news, chart, volatility) saw active trading Tuesday ahead of earnings. 54,000 puts and 39,000 calls traded on the day. The November 32.5 puts were among the most actives, with more than 11,000 traded and open interest increasing by 10,100 contracts. Some of that volume and open interest appears to be related to some ratio spread trading. At 10:45 ET, 5,320 QCOM November 32.5 puts traded mid-market for 68 cents a contract. At the same time, half as many (2,660), November 35 puts traded offerside for $1.29. The action looks like a 1 x 2 ratio spread (for an 8 cent credit) and perhaps a defensive or bearish play on concern shares of Qualcomm might fall when earnings are released Thursday after the closing bell.

Oracle (ORCL, news, chart, volatility) March 18 puts and calls saw action Tuesday on possible straddle sales. With shares sitting unchanged at $18.33 in morning trading, 5,000 March 18 calls traded bidside for $2.63 and 5,000 March 18 puts on the bid for $2.22. Open interest in the calls increased by 5,050 and in the puts, by 4,956. The action appears to be short straddles where the strategist sold the at-the-money strikes to pocket the $4.85 premium. If so, the potential payoff is the $4.85 premium if ORCL settles for $18 per share at March 2009 options expirations. The breakevens are $13.15 and $22.85.

United Technologies (UTX, news, chart, volatility) long-term calls saw action Tuesday. Open interest in the UTX January 2010 calls with the 60 and 80 strikes both saw increases in open interest of almost 5,000 contracts, which seems to be the result of some opening spread trades. At 15:25 ET, with UTX up $2.30 to $53.55 a share, 5,000 of the 60s traded offerside for $8.00 a contract while 5,000 of the 80s on the bid for $2.04. Both traded on the NYSE and appear to be part of a substantial bet that UTX will move higher between now and January 2010. If so, this strategist paid a net debit of $5.96 and has a potential payoff (excluding commissions) of $14.04 if UTX rallies up to $80 or more between now and then.

Southern Copper (PCU, news, chart, volatility) options volume ran double the usual Tuesday and open interest increased by more than 2,000 contracts in the January 15 and January 10 puts. It appears to be related to bearish spread trades after 2,000 of the 15s traded offerside for $2.45 and 2,000 of the 10s mid-market for 60 cents. If so, the strategist paid $1.85 to enter the spread. The potential payoff is $3.15 if PCU falls to $10 or less. The bearish positioning came a day before an analyst downgrade. Deutsche Securiities downgrades PCU today from Hold to Sell.