Heavy trading continues in Etrade (ETFC). Open interest in ETFC calls increased by an impressive 54K contracts after active trading Friday (compared to +5083 puts). Shares are up 23 cents to $1.87 today and session highs, with another 38K calls traded, compared to only 1,400 puts. Sep 2, Oct 2, and Jan10 2.5 calls are the most actives, with buyers dominating the action and looking for more upside in Etrade. Implied volatility is up to 158, from about 148 late Friday and 119 Thursday. News today: Citadel terminated its 10b5-1 stock strading plans and no sale of ETFC common stock had been made under the plan.

Russell 2000 Small Cap Index (.RUT) Sep 630 – 640 call spread traded more than 23000X Friday. Some investors were selling this deep out-of-the-money spread and collecting 35 cents. Open interest data indicate new positions were opened. The Russell is down 3.90 to 575.96.

Stocks are set to open lower amid weakness in overseas markets and ahead of key data during the week ahead. Thirty minutes before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might lose 60 or 70 points in early trading.

Equity markets are lower across the globe, led by China. Earnings worries sent China’s Shanghai Composite Index down 6.7 percent. Hong Kong’s Hang Seng fell 1.9 percent and Japan’s Nikkei lost .4 percent.

Stocks are mostly lower across Europe. France’s CAC 40 Index and Germany’s DAX are both down .8 percent.

In the US, the earnings calender is light and much of the focus will be on the economic data this week. The Chicago PMI is due out at 9:45 eastern time. Economists expect the gauge of regional manufacturing activity to increase to 48 in August, up from 43.4 the month before.

Construction spending and auto sales numbers are due out Tuesday. The economic calendar remains busy during the second half of the week, concluding with key monthly jobs data Friday.

Bonds are in wait-and-see mode. The benchmark ten-year Treasury bond is flat this morning and still yields 3.44 percent.

The dollar fell .32 to 93.10 against the Japanese yen. The euro dipped back below 1.43 against the buck.

Crude oil fell $1.06 to $70.77 a barrel. Gold sank $10 to $948.40 an ounce.

Stocks rebound from early losses, finish mixed. Read More.

Nokia (NOK) shares gained 23 cents to $13.86 after the Wall Street Journal reported the company was to begin selling its first smartphone based on Linux-based software, a move designed to protect market share from Apple’s iPhone (link to story). In the options market, Nokia Sep calls were active after 12000 Sep 14s traded for 50 cents while 10000 Sep 13 calls traded for $1.07 cents. Both trades hit midday and from b/d-to-b/d. The move is possibly a roll up in strikes (closing a position in 10000 Sep 13 calls to open a similar position in 12000 Sep 14 calls) after Nokia’s 11 percent, “iPhone assault” rally this week.

Apple (AAPL) is up 39 cents to $169.84 and the top trade of the day is 7000 Sep 145 puts for 22 cents on PHLX. It was part of a AAPL Sep 135 – 145 – 155 put fly that traded b/d-to-b/d for 43 cents. It might close. If not, it represents a very bearish fly, as it yields its max profits if AAPL falls to $145, or 14.6 percent, over the next three weeks.

*Scanning all single-stocks subject to 2500 contracts minimum call or put volume

Trina Solar (TSL) is up 86 cents to $27.75 and some players looking for more upside in Oct 30 calls, with 4,970 traded, compared to existing open interest of 810. 6125 calls traded total, compared to 520 puts. ISEE data at 61 percent (=1061) opening customer call buyers. Implied volatility (average) is up to 70, from about 68 yesterday.

VIX is up .78 to 25.46 and making a run to session highs, as the S&P 500 falls 7.8 to 1023.18 and session lows. Not hearing anything specific for the decline, but note that 1) After today, 1 trading day remains in August and angst might be higher ahead of the historically volatile months of Sept and Oct, 2) the economic calendar is busy next week, incluing key jobs data Wednesday through Friday, 3) things still haven’t settled down in China, with the Shanghai down 3 percent overnight and down 15.6 percent since Aug 4.