Active trading in the Dow Jones Industrial ETF (DIA), which is down $1.39 to $127.37 and not far from session lows late-Friday. 95,000 contracts traded on the fund, which is 3X the normal volume for the DIAMONDS. 36,000 calls and 59,000 puts so far. The top trade is a Mar Quaterly 127 – 128 strangle, bought for $5.90, 10000X. The hefty premium purchase appears to be a new position and was possibly initiated to hedge the risk of heightened market volatility through the rest of the first quarter. Implied volatility in DIA, which is designed to equal roughly 1/100th of the Dow, is moving up 18.5 percent to 17.

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

CBOE Holdings (CBOE) is up $1.46 to $27.93 and near session highs on share volume of 2.6 million, which is almost 10X the typical levels through midday, after S&P selected the stock to join the MidCap 400 Index. CBOE reported earnings yesterday morning and edged up 17 cents on the results. The company is also presenting at a Credit Suisse conference Friday. Sentiment seems decidedly bullish, as the stock is rallying and options volume is running 5.5X the daily average. 11,000 calls and 3,460 puts traded on the owner of the Chicago Board Options Exchange so far. The action has been small sizes. The top trade is a 258-lot of Feb 28 puts for 45 cents. Sep 28 calls, Mar 27 puts, Feb 28 calls, Feb 27 calls and Jun 18 calls are the most actives and implied volatility is moving up 8.5 percent to 23 on the day.

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

Yahoo (YHOO) adds 25 cents to $16.25 and is seeing relative strength today on reports Alibaba is considering taking its Hong Kong unit private, which would give Yahoo a stake in Alibaba. The headline comes the day after news reports indicated that Alibaba might buy back its 40 percent stake in YHOO. The stock is in the midst of a two-day 2.8 percent advance and today’s share volume of 8.8 million is a lot higher than the expected volume of 5.8 million. Options on Yahoo are actively traded as well. Recent trades include a July 16 – 18 (1X2) call ratio spread for 19 cents, 3000X. Separately, a Mar 14 – 16 put spread was psossibly sold on the stock at 40 cents, 6200X. A third big trade in Yahoo today looks like a July 16 straddle, which traded at $2.88, 4750X.