More than 1 million options traded on Citi (C) today — about 9.6 percent of the total options activity and the most volume in several months. Shares are down 28 cents to $3.67 after the bank announced plans for an offering to repay TARP funds. While the move was widely expected and will loosen the government’s grip on the financial giant, it will also dilute earnings to shareholders. Consequently, shares are back to levels last seen in mid-August, when million contract days were commonplace. Meanwhile, Dec 4 puts and calls are the most actives. With a combined 334K traded and some investors likely exiting positions ahead of this week’s expiration. Open interest in the two contracts exceeds 1 million and, if the stock gets pinned to $4 late Friday, a lot of premium will be lost.

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

Research In Motion (RIMM) is up 6 cents to $63.90 and options are likely to be actively traded over the next few days, as players jockey for position ahead of the company’s Dec 17 (after market) earnings release. 56K calls and 32K puts traded so far today. While a lot of the focus is on December contracts, which offer the most leverage because they come off the board at the end of the week, at least one player is focused on January 2010s. They bought the Jan 70 – 75 call spread, while selling Jan 55 puts. They paid 15 cents, 3000X, creating a bullish three-way spread with a max pay-off if RIM settles at $75 (+17.4%) or more at the January expiration (32 days).

Visa (V) is up $2.56 to $83.90 due to the “index effect” after S&P said V would replace Ciena (CIEN) in the S&P 500 Index. Shares are up on the news and options activity is running 2X the average daily, with 30K calls and 9820 puts traded so far. Dec 85 calls are the most actives, with 12,850 traded. The action seems to include buyers and sellers, as some players are likely closing positions ahead of the expiration. Jan10 $90 calls have traded 6790X and 80 percent hitting ask-side.

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

L-3 Communications is up $1.10 to$84.70, a new 52-week high and option volume is 6x the daily average. Notable trade was the Jan.$85/90 call spread traded 7,800 times in what looks like sale for a $1.70 credit and possibly a roll up in strike prices (possibly closing out positions in Dec 85s opened on 12/7 when about 7000 were apparently bought to open for between $1.25 and $1.60). The Dec. $85 calls have traded over 1,900 contracts, 77% at bid, in what is most likely liquidation.

Sun Micro (JAVA) is up 77 cents to $9.13 after Oracle (ORCL) said it is in constructive talks with EU about its proposed takeover of JAVA. Recent options trades include a put ratio spread, where an investor bought 7000 Jan 9 puts at 17 cents and sold 24000 Jan 7.5 puts at a nickel. This might close or roll a protective position in light of today’s news. ( 5250 Jan 9 puts and 14000 Jan 7.5s puts, which also traded this morning, were recently canceled.)

Stocks are indicated modestly higher after global equity markets advanced on news of a $10 billion Dubai rescue. Thirty minutes before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might add 20 or 30 points at the open.

Stock benchmarks traded mixed in Asia and are mostly higher across Europe after Abu Dhabi agreed to lend Dubai $10 billion to avert a default on a key bond set to expire today. Japan’s Nikkei finished with a modest loss, but Hong Kong’s Hang Seng added .84 percent. A 1 percent gain in UK’s FTSE is pacing the advance in Europe.

Trading is quiet in other markets. With no economic data and not much other news to guide the early trading, bonds are holding modest gains. The benchmark ten-year Treasury is up 2/32nd and yields 3.54 percent

The dollar eased .45 to 88.5 against the Japanese Yen. The euro added .0018 to1.4642 against the buck.


Crude oil lost another 62 cents to $69.25 and gold edged p $2.1 to $1122 an ounce.

Among the stocks to watch, XTO Energy (XTO) is up 18 percent after Exxon Mobile (XOM) made a $31 billion bid for the company. Sun Micro (JAVA) gained 10 percent after Oracle (ORCL) said it has had constructive talks with the EU over its bid for JAVA. Google (GOOG) might see action after the Wall Street Journal reported that the company is set to launch its own mobile device next year.