SPDR Homebuilders Trust (XHB) March puts at the $8 and $9 strike are active after a report from the National Association of Homebuilders showed pending home sales falling 7.7 percent in January. Economists had predicted a decline of 3.5 percent. XHB is down 15 cents to $8.72 and looks like put buyers dominating the order flow, with 100 percent of the 11.7K contracts traded hitting at the offer.

Open interest in Best Buy (BBY) puts increased by 15K to 200K following a day of active trading Monday. It has increased by 28 percent since the Feb options expiration. The action continues today, with shares down 15 cents to $26.67 and investors showing interest in the Mar 30 puts. Almost 7000 traded, compared to open interest of 3,867.

General Electric (GE) is down 7.4 percent to $7.03 and the biggest loser in the Dow Tuesday morning. Recent trades include two large blocks (29,879 and 14,932) June 2.5 puts at the offer for 29 cents on the NYSE. 48.7K now traded, exceeding the existing open interest of 41.9K.

Upside call buying continues for the 5th day, with a focus on April 5 calls as shares trade up 1% to 4.60. OTM Call OI has more than doubled in a week, to 56000 contracts today, suggesting an aggressive view that shares may see price growth into the spring.

CBOE Vix trading slightly lower this morning, near 50.85, and volume picked up at 10:30 when a customer bought the March 50-65 call spread against a sale of the 65-75 call spread for a $1.90 debit 1500x. Trade is similar to a butterfly, but the strikes selected make this a more bullish view than normal. Near the same time a customer sold 3000 March 40-42.5 Put spreads for 85cents, another bullish view on VIX for the short term.

Seeing interest in Sprint Nextel (S) April 3 puts in recent trade. The activity includes a multi-exchange sweep of 5,287 contracts at the offer for 40 cents. 7,400 now traded, compared to open interest of 7,778.

One strategist appears to be using today’s weakness in gold to enter a substantial call fly on the SPDR Gold Trust (GLD). The exchange-traded fund is down $1.33 to $89.60 after gold fell $27.80 to $912.20. The strategist paid $4.95 for GLD Jan 100-150-200 cally fly, 5000X.

JP Morgan (JPM) June 25/35 call spread trades 10000X on the NYSE. Looks like buyer pays $2.3.

Select Sector Financials (XLF) June 10 and 12 calls are the most active options contracts in the first 15 min. of trading. Looks like a stategist bought the spread 26400X, 20000X, and 20000X on the ISE for .25, .25 and .26

Open interest in MGM Mirage (MGM) Jun 7.5 calls saw an increase of almost 19K after an investor bought 19K for 25 cents late Monday. The trade happened at about the same time as a block of 37K Las Vegas Sands (LVS) June 7.5 calls (see yesterday’s 3:30 comment), which was also opening. Shares of both are under $3 and interest in these deep OTM calls seems unusual. In addition, MGM might see early weakness today after the Las Vegas Sun wrote an article noting, with credit line tapped out and loans coming due, Chapter 11 seen as risk for MGM.