As we noted in our premium section last week, unusual Smith & Wesson call volume was detected by Trade Alert systems on Feb 23 when shares were near $3.05, after months in the $2-3 range for months. Buyers focused on the $5 and $7.5 strikes in June, where nearly 4000 contracts traded over two days and total open interest at the two strikes grew from 3 to 3455 contracts as implied volatilities rose sharply. Flow was notable given the average daily option volume in SWHC this year had been fewer than 130 contracts. Exchange data confirmed majority of the flow to be customer accounts buying to open, completing an ideal scenario for identification of a potential upside mover. A favorable WSJ profile helped shares close at 4.43, up 64cents today, and the highest level since October.

Schering Plough (SGP) shares are up 74 cents to $17.06 and options volume is running at 5X the average daily . There is no obvious news to explain the relative strength in shares of the pharmaceutical company. The co. announced yesterday that it will be presenting at a Barclay’s Healthcare Conference Mar 10 around 2:00ET. In the options market, sentiment seems bullish, with 35,000 calls and 16,000 puts traded. The top trades of the day appear to be put writes, with 3000 Jan 12.5 puts traded on the bid for $1.3 and 2500 Mar 20 puts on the bid for $3.60. Mar and Apr 17.5 calls are the most actives, with about 59 percent of today’s 23K contracts trading ask-side.

National Semi (NSM) calls are seeing some interest ahead of next week’s earnings release (March 11, before market). Share are down 8 cents to $10.78 and 5,800 calls have traded, or about 4X (445 percent) the expected for this time of day. Mar and Aug 12.5 calls are the most actives, with about 5,200 traded and 85 percent trading ask-side of the bid-ask spread. Looks like buyers are dominating the flow, perhap expecting good news when the chipmaker posts results.

McGraw Hills (MHP) is down 39 cents to $17,50 and Jan-10 20-strike straddle is seeing interest. Looks like a seller collected $8.80, selling to open 1550X.

Morgan Stanley (MS) is down 44 cents to $17.54 and March 12 puts are active. Today’s 11.5K contracts includes a multi-exchange sweep of 10.3K contracts at the offer for 45 cents. Looks like a investor taking a position in short-term deep OTM puts, as existing open interest is 3,426.

Icici Bank (IBN) is down 3 cents to $10.13 and the April 12.5/15 call trades 1400X for 60 cents on the NYSE this morning. Looks like an opening buyer.

A block of 20K Goodyear Tire (GT) Jan 7.5 calls traded on the ISE for 50 cents per contract erlier today. Shares are down 18 cents to $3.38 and ISEE Sentiment data suggests the trade was an opening customer buy.

iShares MSCI South Korea Fund (EWY) is up 20 cent to $21.60 and options activity is running at 5X the normal levels. Most of the activity is in the July 21/16 put spread after a strategist apparently opened a bearish 1×2 ratio spread, 4500X, paid 62.5 cents on the CBOE. It has now traded 5625X.

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Genentech (DNA) is up $8.69 to $90.33 on DJ headlines that Roche has increased its offer for DNA to $93 per share. 27,000 DNA calls traded on the session, compared to 13,000 puts.