AIG is up 6 cents to $14.63 and more than 27 percent since Thursday. Shares are likely benefiting from short-covering, as the stock became easier to borrow after a reverse stock split on July 1 and short sellers have been aggressively taking positions in antipation of future woes. In the options market, trading remains active, with 72K puts and 43K calls traded. July 14 puts are the most actives, with 13.4K traded and some opening put buyers apparently taking fresh positions. Implied volatility is lower, however; down to 163, from about 170 late yesterday.

A customer appears to be rolling Virgin Media July 10 calls today, selling a total of 9000 for 15cents to close what they bought last week for 40cents, a loss of 225K due primarily to IV contraction from about 67 to 52%. Taking advantage of the lower IVs (and undaunted by this 4day 62% loss), the customer bought 2500 Aug 10 calls for 77.5 cents, maintaining a long view that will likely include earnings, expected early Aug.

Bullish flow in Intuitive Surgical August calls today, possibly indicating positioning for upside exposure into earnings, scheduled for next Wednesday. Shares little changed near $150 and August 150, 160 and 165s dominate the flow, with IVs lifting to the 60% range and sweep algorithms used to pay $7.60 and then 7.90 for a total of nearly 1000 Aug 160 calls at 10:15am. As of noon 4800 calls have traded, vs 850 puts, and most of the $3.9million of call premium has traded on the offer, suggesting significant capital allocated to the position.

Lexmark (LXK) is seeing bullish order flow. Shares are up 18 cents to $17.97 and 8884 calls traded, compared to 250 puts. Trading is active in August 17.5, Aug 20, and july 17.5 calls. On the ISE, where about 2700 calls traded, sentiment data indicate 96 percent opening customer buyers. No news today. Implied volatility is up to 48, from about 46 yesterday. Earnings due out July 21.

CIT is up 14 cents to $1.49 after the Wall Street Journal reported the company is in talks with the government about a possible rescue. The article comes the day after shares tumbled on news CIT hired an advisor about possible bankruptcy. In the options market, trading remains brisk, with 48K calls and 17K puts traded. The top trade is 30K Aug 2 calls for 40 cents on NYSE. Looks like a possible buyer. Implied volatility is easing, but remains elevated at 296, down from record highs above 325 seen midday Monday.

Mirant (MIR) July 15/Sep 12.5 calls spread trades 10000X today for about $2.70. It looks like a position adjustment. If so, it probably closes out a position in the July 15 calls opened on June 9 when an investor sold 15K June 15 calls, bought 10K July 15 calls and sold 5000 Sep 15 calls, which now leaves a bullish position of 10K Sep 12.5 calls and short 5000 Sep 15 calls. MIR is up 29 cents to $15.15.

Hello from Paris. I’ve been traveling in Switzerland and now France over the past week and a half, writing updates from Cafes, Hotels and Apartments. The weather has cooperated and it has been a nice way to spend a few summer days. Today is Bastille Day and Paris is preparing for the big celebration later this evening.

I will be traveling back to the US during market hours tomorrow and will not be posting updates on Wednesday for that reason. Back to business to usual Thursday, however. Until then, good trading and Happy Bastille Day!

Humana (HUM) is trading down $1.44 to $29.15 on news the company was not awarded an important contract from the Tricare program for the South Region. Shares are down and trading is active in July 27 and 30 puts. Looks like some investors might be buying-to-open new positions in the 27s, with 4550 traded, 99 percent hitting ask-side, and open interest of 552. The options are obviously cheap, as they are 7.4 percent out-of-the-money with less than four trading days of life remaining. Implied volatility is up modestly, to 55, from about 54 late yesterday.