RIM shares are down 52 cents to $23.89 and losing ground today on reports an outage of its Blackberry service has spread to the US and Canada. The problems began Monday in markets in Asia, Europe and South America. The news has stirred mixed reaction in the options market. Volume in RIM is 112K contracts, compared to typical volume of about 137K. The top trade is a 20000-contract block of Mar 22.5 puts traded at $3.60 on ISE, where data indicate a customer sold-to-close a position. Some of these puts might have been opened last Tuesday when RIM was around $21 and 17000 Mar 22.5 puts traded on the stock at $5.05 per contract. 38,504 RIMM Mar 22.5 puts have traded so far today against 23,075 in open interest. So some of the flow appears to be opening activity and perhaps on concern RIM shares will fall through the first quarter 2012. Meanwhile, implied volatility is steady around 84 and down about 13.5 percent during the past week. The stock fell to a 52-week low of $19.29 intraday on Oct 4, but has rebounded 23.9 percent since that time.

Sears Holdings (SHLD) is a big percentage gainer and options on the retailer are actively traded today. 8,065 calls and 5,725 puts traded on the stock so far. After rallying to a midday high of $74.30, shares are now up $5.32 to $72.28. October 80, January 77.5, and October 75 calls are the most actives. Most of the action has been in smaller lots. The top trade is 350 Jan13 30 puts for $5.20 when the market was $4.80 to $5.20. A noteworthy trade is a three-way spread, in which the strategist apparently sold Oct 67.5 puts and bought Oct 75 – 80 call spreads. .75 for the package, 248X. Overall, the options order flow seems to reflect the bullish action in the stock price and is interesting, as there are no obvious headlines on the ticker today. Implied volatility in options on the stock is also higher, up 4.5 percent to 61.5.

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

VIX DIPPED BELOW 30 for the first time since Aug 4th, and VIX put flow is running twice the normal pace, with 230K contracts trading at midday vs 133K calls. Nov 25 Puts lead the most actives, with early buyers paying 50cents for 3000 when the index was near 32 and a recent block of 10000 printing at the 65cent midmkt level. Other large put flow involved the Dec 20-21 putspread, trading at 12.5cents 12000x, likely closing.

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

News Corp (NWS) adds 30 cents to $17.19 and one strategist buys-to-open 15000 Oct 16 puts on the media giant for 15 cents per contract. After a seven-day 13 percent run higher, the contract is almost 7 percent OTM with a -.17 delta and expires at the end of next week. 20,450 traded against 6,168 in open interest. The put purchase might be a play on the hacking scandal that rocked the company in the summer. According to news reports out yesterday, the Egan Jones advisory firm sent a letter to shareholders urging them to oust four board members, including the sons of Chief Executive Rupert Murdoch.

Microsoft (MSFT) adds 26 cents to $27.26 and options on the software-maker are actively traded today. 100K calls and 34K puts so far. By way of comparison, typical volume (puts and calls) through the first hour is about 36K contracts. The top trade is an Oct 26 – Jan 27.5 call spread, bought for 11 cents, 10000X on CBOE. The strategist bought October and sold January. The same spread traded multiple times yesterday and open interest data indicate rolling activity. Tuesday’s flow created 20,409 of new open interest in the Jan 27.5 calls. Today’s action likely adds to that interest. Meanwhile, the action in the October 26 calls appears to be closing out positions from mid-April (see 4/14 color), when an investor rolled out of 108K July 27 calls on MSFT to 71K Oct 26s. Open interest in Oct 26 calls increased by almost 90K on 4/15. Since about 30K have been closed out over the past two days, there might be an additional 60K contracts left to offset before next week’s expiration. The contract is now $1.26 ITM and expiring in 9 days. A large Microsoft shareholder might be rolling the short call positions as part of a longer-term buy-write play. MSFT is up 7.5 percent since mid-April and the Oct 26 calls, which were sold at $1.24 on 4/14, are now trading at $1.32.