The PowerShares DB US Dollar Index Bullish ETF (UUP) is up 16 cents to $22.59 after the buck found midday strength and moved higher against some of the other majors Monday. In the options, UUP activity is running 4X the average daily. An impressive 66,000 calls traded so far, compared to 3,850 puts. One player bought 10K Dec 23 calls and paid an average of 22.5 cents per contract. 34.4K now traded. Another bought 5000 Dec 24 calls for an average of 12.5 cents. 17K now changed hands.

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

SanDisk (SNDK) is bucking the bearish trend Monday. Shares have been grinding higher in active trading throughout the day and were recently up $1.93 to $24.05. In the options market, trading is brisk. 53K calls and 20K puts traded so far. Jan2010 calls at the 27 line are the most actives. 8,269 traded (20% Bid / 27% Mid / 53% Ask). No headlines to explain the relative strength or the heavy call activity in SNDK Monday. Shares rallied on earnings last week. Implied volatility (average) is moving as well, to 48.7, from about 42.7 late Friday.

BofA (BAC) is down 5.7 percent and the biggest loser in the Dow Jones Industrial Average after the Wall Street Journal reported that the company’s plans to repay TARP funds and escape the government’s grasp might have hit a snag. The top options trades seem to reflect a bullish short-term view on the bank, however, after a strategist paid 50 cents for the Jan2010 16-17.5 call spread, 20000X.


With BAC trading around $15.40, the spread appears to be a bullish short-term bet, where the strategist bought January calls at the 16 line and sold the same number of January 17.5 calls. They paid $1.10 for the 16s and collected 60 cents for the 17.5s. Consequently, the net debit is 50 cents. The potential pay-off is $1.00 (excluding commissions) and happens if shares settle above $17.50 at the January expiration. Therefore, the strategist is risking 50 cents (if BAC fails to move beyond $16) to make $1 — a ratio of two-to-one. The breakeven at expiration is $16.50.

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

BioCryst shares are up over 12% to $10.90 on news that FDA has approved its flu vaccine to be used in hospitalized H1N1 patients. Option volume is running 6x the daily average with 29,000 call to 2,100 puts. Notable trades include block buying in later dated calls 4,400 of the Dec. $10 calls and 2,500 of the March $12.50 calls. The Dec/March $15 calendar traded 2,000 times in what looks like opening sale for 50c credit. Company slated to report earnings 10/29

Wyndham Worldwide (WYN) is up 25 cents to $17.45 and the 12K Nov 17.5 calls that traded for about $1.22 might be part of a buy-write. The top trade (10.8K) was marked “tied” and coincided with a block of 574K shares at $17.43. Implied volatility (average) is up to 63.3 (+2.25) ahead of an Oct 28 (before market) earnings release.

Recall that, in most buy-writes, the investor sells 1 call for every 100 shares. In this example, the strategist is possibly taking advantage of elevated premium heading into earnings to sell the November at-the-money calls. Assuming they collected $1.20 for the Nov 17.5 calls and bought shares for $17.45, their cost basis (and breakeven) on the position is $16.25. The upside is limited to the strike price of the call. Should shares move to $17.50 or beyond by the November expiration (25 days), the calls will be assigned and shares will be sold for $17.50, and a 7.7 percent profit (excluding commissions).

Lamar Advertising (LAMR) saw late activity Friday, with 2,000 November $30 puts being sold at $2 and 3,000 November $35 calls being bought at $0.30. Lamar has a 25.7% short float and will report earnings on November 5th, and we have been seeing bullish action in the name recently. The Company, which focuses on advertising via billboards, may see a pick up in business as other companies turn from a focus of cost cutting back to improving market share ans stepping up advertising efforts.