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Bullish flow detected in Avalon Rare Metals (AMEX: AVL), with 2392 calls trading, or three times its recent average daily call volume.

Bullish flow detected in Covanta (NYSE: CVA), with 9250 calls trading, or 29 times its recent average daily call volume.

Bearish activity detected in Starwood Hotels and Resorts Worldwide (NYSE: HOT), with 4800 puts trading, or two times its recent average daily put volume. Increasing volume is also being seen in Cisco (NASDAQ: CSCO), Las Vegas Sands (NYSE: LVS), and Marvell Technology (NASDAQ: MRVL).

Sentiment

Stocks have traded in a narrow range following a mixed January jobs report Friday. The data, released before the bell, showed the US economy adding 36,000 jobs in the first month of 2011. Economists were looking for an increase of 145,000. Yet, the unemployment rate unexpectedly fell to 9% from 9.6% and significantly better than the 9.5% that was expected. Also, average hourly earnings increased by .4% and double what was expected. Bonds reacted violently to the news and the benchmark 10-year Treasury lost 25/32nd. The yield on the 10-year is running north of 3.65% for the first time since early-May of last year. Still, volatility in the bond pits failed to stir a similar action in the stock market. With less than an hour till the closing bell, the Dow Jones Industrial Average has traded in a narrow 56-point range and is up 10 points. The tech-heavy NASDAQ is seeing relative strength, up 12.6 points. The CBOE Volatility Index (VIX), which closed above 20 on Egypt fears one week ago, is down .49 to 16.20. Trading in the options market is slowing ahead of the weekend with 7. 4 million calls and 6 million puts traded so far.

Bullish Flow

Radioshack (NYSE: RSH) adds 47 cents to $15.66 and options volume is 3.5 times the average daily amid unconfirmed chatter of involvement from an activist investor. 12,000 calls and 2,620 puts have traded in the electronics retailer. Short-term speculators are focused on RSH Feb 16 Calls with 6,115 traded (63% on the offer). Feb and Mar 17 calls are actively traded as well. Implied volatility is up 8% to 39.5.

PowerShares DB US Dollar Bearish Fund (NYSE: UDN) loses a dime to $27.40 and it appears that one strategist sells the UDN Sep 27 Straddle (Puts and Calls) at $1.75 and $1.80, a total of 25,000 times today. The position looks opening and a bet that the bearish fund will slip towards $27 through September, which would be a moderately bullish play on the dollar.

Bearish Flow

United Rentals (NYSE: URI) touches a new 52-week high and is up 71 cents to $30.48. Put volume is picking up late Friday, including two blocks of URI Feb 28 Puts (two times 1348) for 30 cents and 35 cents when the market was 20 to 35 cents. 5,179 now traded versus 280 in open interest. Looks like some investors are buying to open new positions in Feb 29 and Mar 28 puts as well. Implied volatility is up 2.5% to 40.5. Shares are up an impressive 245% since early July and some investors might be buying puts to protect recent gains ahead of the company’s Investor Day, Feb 11.

Implied Volatility Mover

Heavy post-earnings trading in Las Vegas Sands (NYSE: LVS). Shares are trading down $3.27 to $47 early Friday after the casino operator reported earnings that topped Street views, but revenues fell short of expectations. 84,000 calls and 36,000 puts traded in LVS during the first thirty minutes of Friday’s session. The top trade is a block of 1,500 LVS Feb 50 Calls at 66 cents on the International Stock Exchange at 9:40. It was an opening customer buyer, according to ISEE data, when the stock was at $47.21. Falling implied volatility and a 21 cent drop in the stock price later, the calls are bid at 55 cents. 9,379 traded. LVS Feb 60 Calls are the most actives with 11,046 traded (62% on the offer) versus 4,256 in open interest. The Feb 47, 48, 55 calls, and the LVS Feb 4 Weekly $48 Calls, are seeing brisk trading as well. Implied volatility is down 18.5% to 44 and not far from 52-week lows of 43.5 (52-week high is 87.5).

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.