ARM Holdings (ARMH) is far away from Silicon Valley. Its headquarters are on the campus of Cambridge University in England. ARM holdings has carved out a unique niche in the computer chip market.

It is a different kind of chip maker. Its core business is licensing chip designs to larger companies like Apple (AAPL), Samsung (SSNLF) and Qualcomm (QCOM.), as reported in the New York Times.

Deere (DE) shares trended higher as corn has rallied to a 30-month high. Overall option implied volatility of 29 is below its 26-week average of 33, according to Track Data, suggesting decreasing price movement.

ARM Holdings (ARMH) closed down 4.8% after rallying sharply over the past seven weeks. January call option implied volatility is at 75, February is at 67, above its 26-week average of 46, according to Track Data, suggesting larger price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

The shares of Nvidia (NVDA) have been tearing up the charts in 2011, thanks to a lucrative settlement with Intel (INTC) and a high-profile new partnership with ARM Holdings (ARMH). The month of January isn't quite half-over yet, but the stock is already sitting on a year-to-date gain of 51.6%.

Judging by at least one headline hitting the wires, the stock's rapid rise is making some analysts nervous. However, on Wednesday, one upbeat options trader placed a bet on additional upside from NVDA during the near term.

"It was interesting to watch the pundits react to the iPad recently; even though none of them had used or even really understood the product, it seemed as though no one liked it following its first introduction," notes tech expert Paul McWilliams in his just-released review of the new tech device from Apple (AAPL).

In his Next Inning newsletter, he explains, "Of course, this was similar to how the pundits first reacted to the iPod when it was released. As the pundits trashed the iPad following its release, I reminded readers about the iPod story and predicted we would see the pundits about face and the stock price run up ahead of the product release."

MOST NOTEWORTHY: Nova BioScience, Saba Software and Darling were today's noteworthy initiations:

• Jefferies initiated Nova BioSource Fuels (NYSE: NBF) with a Buy rating and $3.75 target, and finds the risk/reward attractive for biofuels investors as the company has more than 100M gallons of biodiesel capacity slated to come onstream by 2009.
  
• B. Riley expects Saba Software's (NASDAQ: SABA) renewed focus on profitability to drive substantial EPS and free cash flow expansion in FY09. The firm started shares with a Buy rating and $6 target.
  
• Stephens believes Darling International (NYSE: DAR) shares offer a solid commodity cycle and an attractive renewable fuels opportunity and initiated shares with an Overweight rating and $17 target..

OTHER INITIATIONS:

• Elizabeth Arden (NASDAQ: RDEN) was initiated with a Market Perform rating at Wachovia.
  
• Goldman initiated Nuance Communications (NASDAQ: NUAN) with a Neutral rating and $20 target.
  
• Morgan Stanley initiated ARM Holdings (NASDAQ: ARMHY) with an Equal Weight rating.

MOST NOTEWORTHY: Thomas Properties, Tanga Resource Partners, ARM Holdings, Finlay Enterprises and Coca-Cola Femsa were today's noteworthy initiations:

• Shares of Thomas Properties Group Inc (NASDAQ: TPGI) were initiated with a Neutral rating and $14 target at Banc of America. The firm has concerns over the lack of liquidity in the shares and considerable insider ownership levels.
• RBC Capital started shares of Targa Resource Partners LP (NASDAQ: NGLS) with an Outperform rating and $35 target, as they expect shares recover once financing is in place.
• Jefferies started shares of ARM Holdings PLC (NASDAQ: ARMHY) with a Buy rating, citing the company's new products, margin leverage, buybacks and royalties ramp.
• Finlay Enterprises Inc (NASDAQ: FNLY) was initiated with a Neutral rating and $4.80 target at B. Riley, citing integration and execution risks.
• Coca-Cola Femsa SA (NYSE: KOF) was started with a Buy rating at Gabelli, as they find the valuation attractive as the company's growth in key markets of , , and continues.

OTHER INITIATIONS:

• KeyBanc Capital initiated Education Realty Trust Inc (NYSE: EDR) with a Hold rating.
• Fox-Pitt started Rodman & Renshaw Capital Group Inc (NASDAQ: RODM) with an Outperform rating.
• Home Inns & Hotels Management Inc (NASDAQ: HMIN) was initiated with a Negative rating at Susquehanna.
• First Analysis resumed coverage of PharmaNet Development Group Inc (NASDAQ: PDGI) with an Equal Weight rating.

MOST NOTEWORTHY: Warner Music Group Corp (WMG), Red Robin Gourmet Burgers, Inc (RRGB) and Berkshire Hathaway Inc (BRK.A) were some of today's notable upgrades:

• Pali Capital upgraded shares of Warner Music Group Corp (NYSE: WMG) on valuation.

• Matrix USA upgraded Red Robin Gourmet Burgers Inc (NASDAQ: RRGB) to Hold from Sell on valuation.

• Berkshire Hathaway Inc (NYSE: BRK.A) was upgraded to In Line from Underperform at Fox-Pitt, Kelton.

OTHER UPGRADES:

• UBS upgraded ARM Holdings plc (NASDAQ: ARMHY) to Buy from Neutral as the firm believes the company will be a significant beneficiary of the acceleration in 3G handset adoption in 2007.

• Wachovia upgraded Pactiv Corp (NYSE: PTV) to Outperform from Market Perform on valuation.

• Baird raised Patterson Companies (NASDAQ: PDCO) rating to Outperform from Neutral.

• BMO Capital raised UCBH Holdings, Inc (NASDAQ: UCBH) rating to Outperform from to Market Perform.

• O2Micro International Ltd (NASDAQ: OIIM) was upgraded to Buy from Neutral at Oppenheimer citing a possible near-term court settlement with Samsung, which provides significant earnings leverage.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).