Market Recap, Story Stocks (NFLX, LVS, NWSA), Bullish trading in commodities — as well as CHK, VALE, GLD

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Chesapeake (CHK) is up $2.14 to $28.02 and options have seen a day of heavy trading on news it has reached a deal to sell a 25 percent stake in a Barnett shale-gas project. Shares rallied and 86K calls traded. The top trades appear to be a roll, after an investor apparently sold 19K Jan 15 calls to buy 19K July 15 calls. This spread might close a position in the Jan 15s opened on Oct 16 when 20K traded at $13.90 and open interest increased by 20K. Shares are down 81 cents since that time and now the investor might be extending their bullish view (or hedge) an extra 7 months by opening a position in the July 15 calls.

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

Las Vegas Sands (LVS) has been grinding higher, now up $1.50 to $16.44, near session highs, after UBS upgraded the stock to Buy. The firm said they expect Macau market to grow 18 percent year-over-year growth in 2010 and are raising their price target to $20 from $19. Options volume is running 3X the normal levels for midday, with 36K calls and 18K puts traded. Jan 16 calls, Jan 17.5 calls and Jan 15 puts are the most actives, as players jockey for position in anticipation of the stock’s next move. Implied volatility (average) is up 7 percent to 56.

NewsCorp (NWSA) is up 29 cents to $13.98 and Feb 12.5 calls are seeing interest. The top trade is 1249 contracts at 85 cents on ISE. It was part of a sweep of 3500 contracts and an opening customer buyer, according to ISEE data. It comes after News Corp (NWSA) and Time Warner (TWC) reached a a deal that will keep FOX broadcasting station on the cable network — link to story.

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

VALE is up 68 cents to $29.71 and testing December resistance highs just below $30 per share and the Feb 27 – 32 risk-reversal trades 4000X. Looks like an investor pays 8 cents to buy calls, sell puts, and open new positions in both contracts. It was probably tied to a block of 119K shares at $29.72 that traded at about the same time.

BofA (BAC) is up 40 cents to $15.46 and BAC Jan 19 call is today’s most actively traded equity option. The 32.5K traded includes a block of 14.1K traded bid-side for 3 cents per contract, which might be a seller liquidating a position on the view that, even after today’s gain, a move to $19 by the Jan expiration (11 days) is unlikely. BAC Feb 15 puts is today’s 2nd most active, with a block of almost 30K contracts traded bid-side at 73 cents — possibly a closing seller as well.