Yahoo for the trader who just put up a cool 270,000 contract trade on the PHLX on an otherwise low volume Monday with the broad averages near flat and vix up .79 to 17.89. On the PHLX the initiator paid 13c for 30K April 19calls and 1.38 for 70K July 16 calls and 10c for 40K July 22calls versus a sale of 130K July 18c for 56cents. Appears to adjust a large July 16-19 1×2 callspd that traded on jan 4th (see 1/4/2012 color).

Microsoft options (normally behind AAPL and BAC for volume) is leading the single stock space this morning, with a large spread executed on the AMEX at 11:33ET when shares were at 27.95. Initiator bought 80,000 Jan 26 calls for 1.90 and sold 117k July 28 calls for 1.48, netting a credit of about $2.1million. Trade history shows that the Jan 26s were opened last Nov when paper sold the 26-27.5 call spread for 46cents (traded at slight ratio) when MSFT was near 25.31. Trader appears to be taking losses but but continuing a view that MSFT will not see levels much above current $28 range.

Largest implied vol mover today is Spreadtrum Communications, where 30day ATMIV is up nearly 20pts to the 90% level as shares trade down about 7% near 19.46. Option flow in the fabless semiconductor firm is running triple normal levels, and puts dominate the activity with a buyer paying 85cents for Jan 17.5 puts to open a new position struck 9% out of the money and expiring in 18days. Earnings not due till March.

Despite the very quiet final week of the year, 2011 will be another record-setter for the options industry, with approx 4.4billion contracts trading in the form of 220million individual trades, a volume increase of about 10% vs 2010. SPY options represented nearly 16% of the total market volume (703 million contracts). HAPPY NEW YEAR AND THANK YOU FOR YOUR BUSINESS THIS YEAR! Best wishes for a great 2012, from Henry, Fred, and everyone at Whatstrading and Trade Alert!

Reminder: Markets closed Monday for New Years.

On one of the slowest days of the 2011, Leap wireless options are having their most active day of the year as shares leap 15% to $9.75 on a JPM note about potential M&A targets after the collapse of the T-mobile/ATT deal. PCS was also mentioned but Leap is in the lead with 22K calls trading and the Jan 9 calls leading the most actives trading from 61cents to a high of 1.48 as shares approached $10 this afternoon. IV in the LEAP Jan 10 strike is up nearly 23points to 105%.

While overall option volume is very light, TIVO is seeing unusually heavy activity, with 12000 contracts trading, triple the typical daily volume for the name. Puts dominate the flow with a closing customer buyer of Jan 11 puts for $2.34 early in the day when shares were near 8.85. Flow history on these suggest the buyer likely put on the position earlier this year near $2 when shares were around $9. Meanwhile, implied volatility in the options on the stock is among the big movers today. IV in TIVO is up 31 percent to 84! Shares have ranged from the low $7 level in Aug to a few brief peaks near $11. Earnings expected early-March.

Todays takeout of Novellus Systems by Lam Research has shares up 21% near $42, and it looks like a 4million payday for one or two savvy option traders who built the largest block of call open interest in NVLS over the past six weeks. Today we saw a closing sale of 35K March 40 calls for 4.45 vs 42.30 stock, and trade history shows the position was opened in two tranches, 25K for 1.30 on Oct 31 when shares were near $33 and another 10K on Nov 22 for 1.35 when shares were near the same level.

With broad averages up some 3.6% this morning, overall option volume is running 18% above recent average pace and on track for 23million contracts, a welcome improvement over the volume seen during Monday’s 2.9% rally when just 14.1million contracts traded (and that included 2million contracts of exdiv volume!) Most active single names today include BAC, AAPL (the usual top two) followed by INTC, CSCO, and JPM. Intel Dec 25 calls are very active, with 28K trading (vwap 41cents) and much of the flow identified as closing cust buyers.

Krispy Kreme is seeing Notably bullish option flow in front of Wednesday’s post-close earnings release. 3700 calls on the tape by 11am (vs 3 puts) and the focus is on the Dec 7.5 strike, where buyers have paid up to 30 cents to open new positions struck about 12% above current spot. Front term ATMIV of 90% is nearly 20points above Jan ATMIV, and suggests an earnings day standard deviation of nearly 17%, dramatically higher than the non-earnings daily deviation of approx 3.65%.

US Steel call volume is heavy this morning, driven by a seller of 9000 Jan12 30 calls for $2.67 when shares were near $28. Looks outright, with net delta of about 400K shares. Executing firm crossed the trade as shares quickly dipped nearly 30cents, making the print appear offer-side, but a source on the floor confirms paper sold. Last Friday on the PHLX a cust paid 1.575 for 20000 Jan 30-35 call spreads to open a new position when shares were near 27.60 and today’s trade may close half the 30s for a 20cent loss. Current total call open interest of 466K contracts in US Steel is a record for the year.