Expiration Friday Ends With a Fizzle. VIX Falls to Fresh 9-Month Lows. Read More.

Healthnet (HNT) is up $1.12 to $13.50 and trading is active after Reuters reported that United Healthcare is in talks to buy the Northeast operations of the company. 10K calls and 6,745 puts traded.

Rigel Pharmaceuticals (RIGL) is down a dime to $13.86, but options order flow is directionally bullish, with active buying seen in August 12.5 and September 15 calls. A combined 3,900 contracts traded and about 80 percent hitting ask-side. ISEE sentiment data indicate that 3,074 calls were bought-to-open in RIGL today, which represents 94 percent of today’s transactions on the ISE. Implied volatility is elevated, at 93 (+4) ahead of Phase IIb TASKi3 data expected next week.

Mosaic (MOS) shares, after gaining 10% on Thursday on news that Vale (VALE) was in talks to acquire, are off fractionally to $49.70 and option volume is 3x the daily average. Traders are now positioning ahead of earnings, which are slated to be released July 22 (after the bell).

Notable options trades were a “risk reversal” in the September 45 puts – 65 calls done for a $2.25 debit and probably tied to stock as part of a “collar” — buying puts and shares while selling calls. Good volume in the August series and looks like much of it comes from setting up a butterfly in the August 50/55/60 which has seen 2,500 on the wings and 6,900 trade at the 55 body. Implied volatility is flat at 67% on the day, but the overall directional sentiment seems to suggest the “smart money” camp is betting on additional short-term gains in MOS.

Human Genome Sciences (HGSI) is up 12 cents to $3.46 and 22K calls traded today, which represents 5X the expected for midday trading. January 2010 calls at the $10 line are the most actives. More than 10K traded and nearly all traded bid-side. In addition, a block of 220K HGSI shares at $3.55 also traded in recent action. So, some investors might be selling premium (Jan 10 calls for 50 cents) against HGSI shares as part of a buy-write strategy.

Recall that, in a buy-write, the strategist normally sells 1 call for every 100 shares. In this case, the investor is selling a call for 50 cents ($50 because the multiplier is 100) and buying shares for $3.55. The cost basis, per share, falls to $3.05; which becomes the downside breakeven through the expiration. The upside is to $10 (228 percent). If shares, move beyond that level, the calls will be assigned and the strategist must deliver HGSI at $10 per share.

For additional recent and “real-time” buy-write examples, click here. For real-time options news, buy-write and other options plays, click here.

Idaho-based gold and silver miner Hecla Mining (HL) saw two big prints Friday morning. The trades include 23.16K January 2010 calls at the $2.5 strike and the same number of January 2011 2.5 calls. It is possibly a position adjustment (to a buy-write), and a roll of short calls from 2010 to 2011.

Lexmark (LXK) is down 39 cents to $18.24 and options volume is running 6X the usual. Most of the activity is in the Jan 17.5 – 20 call spread, which traded 5500X for $1.10. It was a sold, according to a contact on the exchange-floor. If so, it might close a position in the 17.5s opened in mid June (chart) and opening a bullish position in the 20s. Open interest data Monday might be worth a look, as LXK is due to report earnings Tuesday, before the bell.

Stock index futures point to a sluggish start on Wall Street on expiration Friday. Forty-five minutes before the opening bell, futures indicate that the Dow Jones Industrial Average might lose 40 or 50 points at the open.

GE lost 4.4 percent after reporting a quarterly profit of 26 cents per share, which beat Street estimates by 2 cents, but revenues fell 16.6 percent and below analyst expectations.

Citi (C) and BofA (BAC) are out with earnings as well. BAC is down 2.7 percent after EPS numbers beat expectations, but total profits fell due to ongoing credit woes. Citi sits little changed after reporting better-than-expected profits, but revenues that fell short of expectations.

Meanwhile, Google (GOOG) is down 2 percent after reporting better-than-expected earnings. However, shares slumped, as revenue growth was meager amid slow online advertising sales.

IBM is a bright spot. The stock is up 2 percent after the company reported quarterly earnings of $2.32 per share, which easily beat Street estimates of $2.02. IBM also guided estimates higher for the full year.

While stock index futures slumped early on earnings, prices came off their worst levels of the day after housing data, released at 8:30 eastern time, showed some improvement.

According to the latest numbers, builders broke ground at an annualized rate of 582,000 homes in June, up from 562,000 in May and better than the 530,000 economists had expected. Building permits, a better gauge of future activity, rose from 518,000 to 563,000. Economists were expecting 524,000.

Bonds gave up early gains and fell on the strong data. The benchmark ten-year Treasury is down a few ticks and yields 3.58 percent.

The dollar edged up .13 to 93.84 on the yen. The euro slipped .0063 to 1.4075 on the greenback.

Crude oil slipped 40 cents to $61.62 a barrel and gold gave up $1.80 to $933.60.

Finally, the options expiration is likely to be a factor. While total volume was on the light side yesterday (about 80 percent of normal), the pace might pick up a bit; as today is the last day to trade July 2009 options contracts.