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Bearish activity detected in Infinera (NASDAQ: INFN), with 4856 puts trading, or two times its recent average daily put volume.

Bullish flow detected in BPZ Resources (NYSE: BPZ), with 2584 calls trading, or four times its recent average daily call volume.

Bearish activity detected in China MediaExpress (NASDAQ: CCME), with 26,963 puts trading, or eight times its recent average daily put volume.

Increasing volume is also being seen in Ford Motor (NYSE: F), Genzyme (NASDAQ: GENZ) and the US Oil Fund (NYSE: USO).

Sentiment

With one hour before the close, trading is orderly Monday. After the Dow’s 178-point nosedive Friday, the underlying tone of trading remained cautious early. The domestic economy was in focus after data showed personal spending up .7% and incomes .4% in December. Economists were looking for increases of .6% and .5%, respectively. Separate data released later showed the Chicago PMI up to 68.6 in January and much better than the 65.0 that the economists were expecting. Coal stocks are higher after Alpha Natural Resources (NYSE: ANR) made a bid for Massey Energy (NYSE: MEE). Meanwhile, Exxon Mobil (NYSE: XOM) is among the best gainers in the Dow Jones Industrial Average after the oil giant’s earnings topped analyst estimates. Sixteen other Dow stocks are higher, 13 lower, and the industrial average is up 40 points in the final hour. The tech-heavy NASDAQ has added 10. The CBOE Volatility Index (VIX), which settled above 20 Friday, is down .33 to 19.71. Trading in the options market is much slower than Friday, with about 6.9 million calls and 6.2 million puts traded so far.

Bullish Flow

Yahoo (NASDAQ: YHOO) is trading up 24 cents to $16.07 and overall flow seems bullish today, a few days after shares fell 2.8% on earnings news. Shares have now recovered the losses and today’s options volume includes 61,000 calls and 16,000 puts traded. YHOO Feb 17 Calls, which are 5.8% out-of-the-money with 18 days of life remaining, are the most actives with 16,200 traded. Another 12,200 YHOO July 20 Calls have changed hands. The top trades are 3,478 July 15 – 17 risk-reversals at a nickel on the International Stock Exchange (ISE) at 10:53, where sentiment data indicate calls bought, puts sold. The same bullish risk-reversal traded at a nickel, 3230 times on ISE about five minutes after the opening bell.

Cisco (NASDAQ: CSCO) loses .5% to $20.82 and is one of 12 Dow stocks heading lower in the first few minutes of trading Monday morning. Early options action includes 5318 CSCO Feb 22 Calls, which have traded 91% on the offer. It appears buyers are dominating the action and possibly eyeing earnings, due next Wednesday, Feb. 9, after the close. Shares tumbled 16.2% on Nov. 11 after earnings were last reported and fell another 7.4% before hitting a 52-week low of $19 on Dec. 3.

Bearish Flow

iPath S&P 500 VIX Short-Term Futures (NYSE: VXX), which hit a new low of $29.08 early Friday before rallying for a 8.4% one-day gain, is off 25 cents to $31.85. Trading in VXX options is active and includes a buyer of VXX Jun 20 – 22 Put spreads at 56 cents, 1000 times. Another noteworthy trade is a VXX Feb 31 – 29 – 28 Put spread, 2045 times on CBOE and might be a position adjustment, as open interest is sufficient to cover in all three contracts. 21,000 puts and 10,000 calls traded in the fund so far. Although shares jumped Friday, VXX is down nearly 75% since June of last year, as the product is designed to track volatility with futures, which involves a lot of rolling of positions.

Implied Volatility Mover

Pre-earnings action in McKesson Corp. (NYSE: MCK) led by buyers of MCK Feb 75 Calls. The top trade is 3480 at $1.75 when the market was $1.30 to $1.45. 6113 now traded versus 819 in open interest. MCK Feb 72.5 Puts are seeing some interest as well. 1202 traded. Implied volatility (IV) is up 12.5% to 26.5 ahead of the results, after the close of trading today. Shares jumped 5.6% when earnings were last reported on Oct. 27.

Frederic Ruffy is the Senior Options Strategist at Whatstrading.com, a site dedicated to helping traders make sense of the complex and fragmented nature of listed options trading.