Allos Therapeutics (ALTH, news, chart, volatility) implied volatility is reaching record highs. Shares are up 25 cents to $5.95 after Wachovia upgraded the stock to OutPerform from MarketPerform. Implied volatility is up to 172 from about 131 a week ago and at its highest levels since the record 190 seen on October 29.

Options volume in Interactive Brokers (IBKR, news, chart, volatility) is running at nine times the average daily after 3,000 March 22.5 puts and 9,000 March 12.5 puts traded midday. Shares of the online broker are up 14 cents to $16.74 and the activity was part of a 1 x 3 ratio spread, which was bought for $3.35 and tied to IBKR shares, delta neutral, at $16.70.

Volume is picking up in Hansen Natural (HANS, news, chart, volatility) December 30 and 35 calls, with about 2000 contracts traded and almost 90 percent hitting offerside. Implied volatility is moving up to the mid-80s and shares are up 65 cents to $28.47 in reaction to renewed takeover chatter. Coca Cola (KO) mentioned as possible suitor.

Options volume in the SPDR Retail Trust (XRT) is running at 8 times the average daily levels, with 79,000 puts and 12,000 calls already traded. XRT, an exchange-traded fund that holds shares of 53 different retailers, is up 96 cents to $18.70 with relative strength seen in a number of large caps including Home Depot (HD), Wal-mart (WMT), and Lowe’s (LOW). The gains in the sector come as many retailers release their November sales results today. Sentiment seems a bit bearish, with large blocks of XRT January puts at the 18, 19, and 20 line traded. 75,000 have traded in all, with indications pointing to opening put buying. Some of the activity might be tied to shares as numerous blocks of XRT shares also traded today.

Options volume in handset maker Ericsson (ERIC, news, chart, volatility) is running two times the average daily levels, with 3,660 puts and 473 calls traded. Shares are down 13 cents to $7.12 the day after Cowen said they expect the still deteriorating handset market to hurt Ericsson’s fourth quarter results. December 7.5 puts are seeing most of the action. 3,214 have traded, compared to open interest of 3,179. Appears to be some buying and selling, perhaps some closing trades.

Safeway (SWY, news, chart, volatility) volume is running four times the usual: 13,000 calls and 630 puts traded. With shares up $1.05, most of the action is in the December 25s and appears to be mostly selling-to-close these out of the money calls. 12,135 contracts have traded (99 percent bidside), compared to open interest of 25,204.

The SPDR Homebuilders Trust (XHB) is seeing a second day of relative strength and options activity is picking up as shares move to three-week highs. XHB, which hold shares in 21 different housing companies, is up 72 cents to $12.71 after Toll Brothers (TOL) shook off a disappointing earnings report and moved 7.5 percent higher in morning trading. Meanwhile, XHB options volume is running four times the usual after large blocks of January puts and calls traded. 25,000 of the January 15 calls and 30,000 January 13 puts have now traded, mostly on the offer, as some investors might be buying strangles in anticipation of heightened volatility in the housing sector over the next two months.

Sentiment in National Semiconductor (NSM, news, chart, volatility) is bullish despite weakness in the share price. The stock is down 32 cents to $10.37 and total options volume is running two times the average daily levels, with 4,450 calls and 580 puts traded. All of the day’s trades have come in fewer than 300 contracts and the focus is on the December and January 10 and 12.5 calls. Roughly 71 percent of that activity is trading offerside. Looks like some investors are buying these calls in anticipation of a move higher in the chipmaker. The bullish trading comes ahead of an earnings report due out December 8.

Foot Locker (FL, news, chart, volatility) options volume is running two times the average daily, with 4,380 calls and 110 puts traded. The top trade of the day is a block of 2,244 December 7.5 calls traded for 40 cents. The bid-ask was 40 to 55 cents at the time and open interest is 391, which suggests an opening call write. In fact, all 3,000 of the December 7.5s so far traded (and 87 percent of the 1,287 January 7.5 calls) traded bidside, as investors might be selling them against shares and or on the view that FL will not close above $7.50 at December options expiration (15 days). Shares are up 29 cents to $7.20. Implied volatility is in the mid 90s.

Falls to 4-Year Lows on Weak Economic News