Block of 50,000 CIT Aug 2.5 Calls were bought for 45cents by Goldman on the CBOE a moment ago when share were near 1.72. Will create the largest block of open interest in this name, currently down more than 12% and near its 52w low of 1.65.

Option volume in Gap Stores hit 5x normal today, let by a risk reversal trade in which a customer bought 4000 August 17.5 calls and sold 4000 12.5 Puts for a net 5cent debit. Shares currently near 15.18, and earnings are due just before Aug expiry. Customer appears to be looking for upside into that number, and is comfortable taking a long position if shares were to sink to the 12.5 strike

Alcoa shares trading in a wide range ahead of this afternoon’s earnings, and options flow is running 3x normal pace with a bullish bias for the second day in a row, as shares hover near 9.05, off about 4% after an early high near 9.75. July 10 calls are most active, with 22,000 on the tape by noon, and ivol lifting 6 points at the strike to 100%. Marjority traded in the 45-50 cent range, with the largest block a 47cent buyer of 6700 on the CBOE just after 10am when shares were near 9.69. More than 53,000 of these calls traded yesterday, with buyers opening nearly 29k contracts of new OI. Market prices suggest an earnings gap move of nearly 80cents is expected.

Volume and volatility are up today. Approximately 4.95 million puts and 4.4 million calls traded, which represents 1.55X the normal action for midday. The total put-to-call ratio is 1.12 (compared to a 22-day average of .77). Meanwhile, the CBOE Volatility Index (.VIX) is up 2.04 to 32.89 and session highs, best levels in more than a month.

Activision Blizzard (ATVI) is down 38 cents to $1.40 and 3,450 calls traded, or about 3.5X (353 percent) the expected for midday action. The action is focused on July 11 and 12 calls, with more than 3,000 and about 90 percent hitting ask-side. ISEE sentiment data confirm that customers are buying to open puts on the video-game maker. Implied volatility edging up to 49, from about 47 late yesterday. Earnings expected late July, after the expiration.

Large blocks of Aetna (AET) calls traded again today. We discussed rolling of July and Oct puts yesterday, possibly extension of a protective position. A customer bought more than 20K January (2010) calls at the 40 strike Monday. Today, the Jan 40 call is again in focus, with a buyer paying 55 cents to 15,000. 25K traded total. Implied vols steady around 60.

Stocks are holding modest gains in quiet market action Wednesday.

With no economic data to guide the morning action and no earnings of major market significance, investors are awaiting an earnings report from Alcoa (AA). Alcoa unofficially kicks off the earnings reporting season with a release today after the closing bell.

Some of the retailers are seeing early strength on better-than-expected earnings from Family Dollar (FDO) and an analyst upgrade of Amazon.com (AMZN).

Energy-related names (OIH, XOI) are showing some resilience, even as crude oil falls to session lows on bearish inventory data. Crude oil is down $1.37 to $61.36 a barrel. Gold slipped $10 to $919 an ounce.

Bonds are holding modest gains, as players await this week’s first important economic data. The benchmark ten-year Treasury is up 5/32nd and yields 3.44 percent.

Weekly jobless claims and wholesale inventory data are due out Thursday morning. An auction of $19 billion in Treasury notes will be worth watching later today, as players will be watching to see if demand is stong on the heels of a sloppy auction of 3 years yesterday.

Dish Network (DISH) is up 32 cents to $14.95 and 7,600 calls traded, compared to 800 puts. The top trade is 2000 Aug 15 calls on the ISE, an opening customer buyer, according to sentiment data. Some of the activity might be rolling out of July 15 calls, as 5,600 traded, compared to open interest of 17.4K. However, ISEE sentiment data indicate that 3,100 DISH calls were bought-to-open, suggesting opening buyers in the front-month as well. Implied vols steady around 61.