Vulcan Materials (VMC) is up 4 cents to $44.83 and early options trades on the stock include a multi-exchange sweep of 1,063 Feb 45 puts for $1.80 per contract. 3,070 now traded against 106 in open interest. Data from the ISE indicate opening buyers and implied volatility in the options on VMC is up 21 percent to 41. Some investors might be hedging their bets ahead of a Feb 15 earnings report. The stock has surged 33.8 percent since Martin Marietta made an all stock hostile bid for the maker of sand, gravel, and other construction-related materials. VMC has thus far rejected the offer. Martin Marietta might shed light on its future plans when the company reports earnings tomorrow.

Dryships (DRYS) sees a second day of increasing volume. Shares are up 20 cents to $2.63 on volume approaching 14 million. Typical volume in the first two hours is about 2 million shares. Meanwhile, options activity is running 3.5X the daily average. 21,000 calls and 1,245 puts traded on the stock. Today’s flow seems to include buyers and sellers. Feb 2.5 calls, which are now 13 cents in-the-money and expiring in 11 days, are the most actives. The top trade is a 411-lot on the 15-cent bid and is possibly a liquidating trade. Mar 2.5, Feb 3, Mar 3, and Jan 2.5 calls are the next most actives and levels of implied volatility are moving up 1.5 percent to 84. DRYS saw a pop late Friday on increasing volume as well (see 2/3 color). The gains in the stock and high volume are possibly related to news today that the company’s Oil Drill UDW unit struck a drilling contract with Norweigan Continental Shelf, which will add about $653 million in revenues to the backlog.

CBOE Volatility Index (.VIX) fell to multi-month lows of 16.1 Friday morning and was recently down .77 points to 17.10. Trading in the VIX pit is very busy today and included some sizable blocks. One noteworthy trade is a Feb 26 – Mar 35 call spread, apparently bought for 29 cents, 40000X, and might close a positoin opened a couple of weeks ago when the same diagonal spread was sold for 7.5 cents, 40000X (see 1/24 color). Separately, an investor bought 60,000 April 20 – May 26 strangles on VIX for $4.45 and seems to have opened a position in anticipaton of increased volatility in the volatility index before mid-May. A third noteworthy trade in the index today is an April 28 – 35 (1X2) call ratio spread for 20 cents, 15000X. April 28 calls were sold to buy twice as many April 35 puts — possibly roling up in strike prices, as open interest in the April 28s is over 67K. Total volume in VIX is 390,000 calls and 177,000 puts.

MIPS Technologies (MIPS) loses 10 cents to $6.41 and options volume on the Santa Clara, CA chipmaker is running 8X the daily average. 6840 puts and 630 calls traded in the name so far. The flow is concentrated in April 4 puts, which are 37.5 percent out-of-the-money. 5,825 traded, with almost three-quarters of the volume trading at the 15-cent asking price. Open interest is 1,476 and some investors might be buying the contract on the view shares will give up recent gains. The stock closed 2011 trading for $4.46 and is up 43.7 percent year-to-date. A 52-week low of $3.93 was recorded on 12/19. Earnings were announced on Jan 25.

Pioneer Natural Resources (PXD) is up $2.98 to $105.64 and has now rallied 8.4 percent this week. One player in the options market seems to be anticipating additional gains in the Irving, TX oil and gas company and sold 5,000 Feb 95 puts on the stock to buy 2,500 Feb 105 – 115 call spreads, paying $1.55 for the package. The position looks opening and tied to 168K shares at $104.68. Earnings due out Feb 6 and the company presents at a Credit Suisse conference on Feb 7.

Microsoft (MSFT) notched a new 52-week high today and is up 11 cents to $30. Shares have rallied 15.6 percent so far in 2012 and were helped by a better-than-expected Jan 19 earnings release. One player in the options market seems to be anticipating additional gains for Micorsoft in the months ahead and initiated an Apr 30 – 32 call spread on the stock for 64 cents, 10000X on ISE. Data from the exchange is reporting a firm initiated the trade to open. It looks tied to 260K shares of stock and seems to be targeting a move to $32 or beyond through the April expiration, which represents a 6.7 percent gain over the next 78 days.

Apple Computer (AAPL) implied vols are falling to 52-week lows. Levels are down 4.5 percent to 17.5 and down 41.7 percent over the past 10 days. There was a big decline after earnings were reported on 1/24. To be specific, on Jan 25, IV in Apple options fell 40 percent to 20. Now, at 17.5, it is significantly below the actual volatility on the stock. AAPL 30-day HV is 25.3 percent. The 120-day is 27.9 percent.

Zynga (ZNGA) gains $1.90 to $12.50 on volume of 27 million shares, which is 10X the typical volume for the San Francisco Internet company, as Facebook’s IPO disclosure has lifted shares of many companies in the social media space today. GRPN and RENN are both up more than 9 percent. LNKD, SINA and P are also outperforming. Trading in the options remains active as well, with 20,000 calls and 19,000 puts in ZNGA so far, which is 5X the daily average for the name. Levels of implied volatility are moving up 19 pecent to new 52-week highs of 96.5 and some investors are perhaps selling premium into the IV spike, as the top two trades are lots of Feb 10 put at 30 and 35 cents when the market was 30 to 40 cents. 7000 traded. Feb 12 puts are the next most actives. Mar 11, Feb 11 and Mar 12 calls on ZNGA are seeing active trading as well.

Big call buyer is back in BofA (BAC) Wednesday. Shares have added 25 cents to $7.38 and a 62500-contract block of Apr 8 calls is bought on the bank for 37 cents. The trade is tied to 2.3 million shares at $7.40 and likely adds to positions opened yesterday, when 62,500 were bought for 28 cents per contract (see 1/31 color).

Relative weakness and high volume in ATP Oil and Gas (ATPG) today. Shares of the Houston, TX driller are down 10 percent to $6.33 on volume of 3 million shares, which is more than 6X the expected. Options on the stock are actively traded as well. 7,670 puts and 4,880 calls so far. Feb 6 puts, which are 6.1 percent OTM with two-and-a-half weeks of life remaining, are the most actives. 1,890 traded. Feb, Mar and Jun $5 puts are also seeing interest and implied volatility is rallying 47 percent — once again elevated at 139.5. Players appear to be bracing for further losses in shares, which are down almost 70 percent since February of last year. No company news to explain the high volume in ATPG today.