The markets continued to work mildly higher as more investors had a chance to react to yesterday's interest rate cuts. There may be some upward pressure on the markets though the end of the week.

The NYSE had volume of 3 billion shares with 2,160 shares advancing while 1,155 declined for a gain of 61.87 points to close at 9,970.9. On the NASDAQ, 2.1 billion shares traded, 2,005 advanced and 1,006 declined for a gain of 14.82 to 2,666.48.

In options, there were 6.4 million puts and 8.6 million calls traded for a put/call open interest ratio of 0.75. The heavy call activity indicate a more positive outlook on the market. General Electric (NYSE: GE) saw heavy volume on the September 40 calls (GEIH) with over 977,900 options trading; likewise the September 37.50 calls (GEIS) with over 638,900 options trading. This excessive high volume is dividend arbitrage as funds grab the stock to get the $0.28 dividend coming tomorrow.

PowerShares QQQ Trust ETF (NASDAQ: QQQQ) traded heavy volume on the September 50 calls (QQQIX) with over 118,300 options trading and the September 49 calls (QQQIW) with over 77,300 options trading. Altria (NYSE: MO) moved heavy volume on the October 70 calls (MOJN) with over 48,000 options trading. Goldman Sachs Group (NYSE: GS) saw heavy volume on the September 210 calls (GPYIB) with over 47,000 options trading. Financial Sector SPDR ETF (NYSE: XLF) saw heavy volume on the September 35 puts (XLFUI) with over 34,100 options trading.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.