Large blocks of out-of-the-money Pfizer (PFE) calls have traded in recent action. Shares are up 21 cents to $15.23 and it includes: 50K Dec 18 calls at 15 cents, 50K Dec 17 calls at 30 cents, 50K Sep 17 calls at 10 cents, 50K Aug 16 calls at 11 cents, and 30K Dec 16 calls at 58 cents. Sources tell us this is a brokerage firm crossing blocks for account swaps, Not a spread or directional play on the pharmaceutical maker.

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

Sprint Nextel (S) is down 23 cents to $4.82 and options are actively traded for a second day heading into earnings, tomorrow before market. Open interest in Aug 5 call options increased by 19,494 following a day of active trading Monday. At 110,970 contracts, the August 5 call option is now the largest position in Sprint. Another 13,438 traded to day, with 67 percent traded at the Ask. Meanwhile, Sep 5 calls have traded 4681X (96 percent Ask) and the top trade in Sprint today looks like a buyer of 3300 Aug 5 puts at 29 cents each on ISE. Overall, the flow over the past two days seems to reflect optimism heading into the results. Implied volatility is up nearly 10 percent to 55 and, although shares are down today, the stock is up 14.2 percent month-to-date.

Open interest in Bank of America options grew by 81,000 contracts following Monday’s trading, the largest growth among single stocks led by a conversion/reversal trade in Jan 2012. In this trade the initiator paid 8 cents to convert, or effectively sell the Jan 2012 forward against a purchase of 1.5million shares of stock. Trade is neutral in terms of direction and volatility and may have been done for cash management purposes, but the conversion also profits if BAC were to increase it’s dividend beyond the amount currently priced into the market.

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

BP shares are up $1.57 to $38.43 and options action remains brisk, as players react to the latest developments in the Gulf spill saga and await earnings. According to recent media reports, BP’s Hayward is stepping down in October and will take a job at the TNK – BP joint venture. Making Hayward the fall guy seems to be the company’s latest efforts in trying to mitigate some of the negative impact from a PR nightmare. In any event, BP is up $1.57 to $38.43 and implied volatility easing about 2 percent to 52.5 on the Hayward news. Meanwhile, Aug 35 puts and Aug 40 calls are the most actives, as players jockey for position ahead of tomorrow morning’s earnings release. Most of the action is in smaller lots. The top trades Aug 40 – 45 put spreads bought at $1.21, 1000X in recent trade.

Disney shares are up 50c to $34.60 and notable trade in the October $28/$32 put spread trades 5,500x at 56c in what looks like a closing purchase to cover a bear put spread position opened in two tranches on 6/8 and 7/1 when DIS was trading $33 and $31 respectively.ea

Activison shares up 20c to $11.90 an notable trade in the Jan. 2011 as the $10 puts and $14 calls trade 7,800 contracts each in what appears to be a bullish risk reversal (sold puts and bought calls) for a 1c credit in what should translate into new position.