After volatility picked up early, things settled down and the major averages finish little changed. VIX falls. Read More.

Substantial put fly hits Apple Computer (AAPL) late Friday. With shares up 86 cents to $144.60, the action is in the June contracts after the strategist apparently bought the June 120 – 130 – 140 fly 7000X for $1.45 (sold 14K June 130s for the body). If so, it is a short-term bearish trade that yields its best profits (8.55) if AAPL settles at $130 in two weeks!

Baidu (BIDU) is off to a strong start in June, up $8.37 to $301.77 today and 16.5 percent since last Friday. In the options market, volume the Chinese Internet co. is running 2X the usual, with 21K calls and 15K puts traded. Most of the activity has been in smaller size. The top trades of the day: 490 June 300 – 280 put spreads for $6.95–perhaps a bet on a pullback before the expiration (2 weeks from today!). Implied volatility is up to 54.5, +1.5 today and +9.5 on the week.

Sprint Nextel (S) Aug 4 – 6 call trades 15000X today. Looks similar to the activity yesterday, which resulted in falling open interest in both contract of more than 19K. Probably closing spread trades, with the seller collecting $1 even today.

Joy Global (JOYG) shares are adding another $1.70 to $40.15 and have gained 50% in the past four weeks. Option volume is 3x the daily average today as it looks like investors using strength to roll up and out. The June $40 calls and July $45 calls have each traded over 2,000 contracts, that matches OI in the former but is double the OI in the latter. There has also been spreading in the July $35/$40 puts with volume in former matching OI and the latter new positioning. IV is flat at 62% on the day.

iShares Taiwan Fund (EWT) is up a penny to $10.79 and one strategist appears to expect the fund to stay rangebound over the next two weeks–sold the EWT June 10 put – 11 call strangle 6,250X for an average of .275 cents (tied to some EWT shares.) The strangle has now traded more than 21K times.

American Axle (AXL) is up 2 cents to $2.58 and the Oct 5 – 7.5 call spread trades 10000X today for 25 cents. The spread was sold. Looks like a new position in both contracts and probably on the view that a move beyond $5 (93.8 percent) by the October expiration is unlikely.

Stocks bounced around in morning trading, but the Dow Jones Industrial Average has battled back and is holding modest gains midday.

Stock index futures rallied before the stock exchanges opened after the Labor Department reported that the US economy lost 345,000 jobs in May. The number was significantly better than the 520,000 loss economists had expected.

However, investors sold into the early strength, as the news sparked a sharp rise in bond yields and a rally the dollar, which also sent crude oil and gold prices sharply lower. After hitting a high of $70 in early trading, crude fell into the red shortly after the payroll data.

Another reversal in mid-morning trading helped lift the equity market and the situation had stabilized by midday. Crude is back to unchanged at $68.80. Gold is still reeling, down $21.40 to $96.90 on dollar strength.

The buck is still holding higher ground, as higher bond yields attracts flow to the buck. The dollar is up 1.45 to 98.07 on the yen. The euro is taking a hit and dipped back below 1.40 against the greenback.

Meanwhile, the benchmark ten-year Treasury is down 23/32nd, but well off session lows. The yield on the ten-year is at 3.83 percent, up from 3.76 percent pre-payrolls, but down from six-month highs above 3.9 percent.

The CBOE Volatility Index (.VIX) is down .96 to 29.22 as stocks recover and event risk has passed. The Dow is up 40 points. Approximately 2.9 million puts and 3.9 million calls traded by Noon eastern time, a ratio of .75.

Puts are active in Genco Shipping (GNK) as the dry bulk shippers (DRYS, DSX, EGLE, EXM) show relative weakness. Shares are down .81 to $24.36 and 10,000 Oct 15 puts traded, including a purchase of 9,600 for $1.30.

Bearish trading is also being seen in PharMerica (PMC), the Currency Euro Trust (FXE) and the Market Vectors Coal Fund (KOL). Bullish trading picked up in a number of the metals companies, including Alcoa (AA), AK Steel (AKS), and Cliffs (CLF).

Genco Shipping (GNK) is down $1.03 to $24.14 amid relative weakness in the shippers (DRYS, EGLE, EXM, DSX) Friday. In the options market, sentiment seems cautious as well. 12K puts traded on GNK so far, compared to 1,460 calls. The volume includes a purchase of 9,600 Oct 15 puts for $1.30. 10K now traded. It might be tied to some shares, as two blocks of GNK totaling 100K trraded at about the same time. Implied volatility edged up to 88, from about 87 the day before.

PharMerica (PMC) is down 74 cents to $17.66 and put buyers surfaced Friday, the day ater the company’s 2009 annual stockholder meeting. June 15 puts are leading the order, with 1,525 traded and 97 percent hitting ask-side, 2530 puts traded total. Zero calls. Impled volatility rallying to 42, up from about 34 the day before.