MBIA sees a spike in heavy volume and options action is heating up as well. Shares jumped 10 – 15 minutes ago and, after hitting a high of $9.19, are now up 17 cents to $8.81. Upside call buyers are showing interest in NOv 10 and $11s. Implied volatility in the options on the stock is up 23.5 to 99. It’s not clear what the catalyst is, but there seems to be a news item out there.

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

CBOE Volatility Index (.VIX) is moving off Friday’s multi-month closing lows and was recently up 3 points to 27.53 amid very light volume in the options market today. 3.5 million calls and 4.1 million puts traded across the exchanges so far, which is only about 71 percent the daily average during the past month. Trading is relatively slow in the VIX pit as well, with 104,000 calls and 54,000 puts traded in the product through 1:00 ET. One noteworthy trade is a Jan 35 – 40 call spread on the volatility index bought for 77.5 cents, 10000X. Beyond that, there isn’t much to report as today’s uptick in the volatility index might simply be technical after the 46 percent plunge since Oct 4. In addition to end-of-month position squaring and the 1.5 percent slide in the euro/USD today, anxiety about the fallout from MF Global’s bankruptcy, Friday’s jobs data and the FOMC’s rate announcement Wednesday are likely helping lift the VIX on Monday.

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

Microsoft (MSFT) loses a nickel to $26.93 and is one of 27 Dow stocks trading lower Monday morning. Early options trades on the software-maker include a Feb 29 – 30 call spread for 21 cents, 4100X on ISE. More than 10K now traded and sentiment data indicate a firm is opening a new position in the spread. MSFT is up 9.8 percent since Oct 3, but has been trading sideways in a range during the past two weeks. Shares recorded a 52-week high of $29.46 intraday on 1/27. Today’s spread trader might be looking for the stock to break out of the recent range and revisit those levels through mid-Feb 2012.

US Steel (X) rallied this morning and is trading up $2.17 to $27.14. Options volume on the steelmaker is running 2.5X the daily average, with 86,000 calls and 23,000 puts traded on the stock so far. The top trade is a Nov 26 – 28 call spread sold at 90 cents, 7500X. Both contracts now traded more than 10K and might roll positions opened just yesterday when open interest in Nov 26s inreased by 12,000. If so, the contract, which traded 14830X at a VWAP of $1.17 yesterday, is being liquidated at $2.35. New positions being initiated in Nov 28s for $1.45. Some of the steel names are rallying around news that Iron Ore prices are down sharply as Chinese companies are buying less of the steel-making ingredient (Dow Jones).

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