General Mills (GIS) option was active on call volume of 88K contracts, compared to put volume of 8K contracts. October put option implied volatility is at 28, January is at 25, above its 26-week average of 21, according to Track Data. The active call volume suggests traders taking positions for price movement.

Stocks with implied volatility below index mean range: Genzyme (GENZ), Potash (POT) and Chelsea Therapeutic (CHTP), according to IVolatility.

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

Under Armour, Inc. (UA) closed up $1.06 to $45.23. UA October put option implied volatility is at 48, January is at 52. This is above its 26-week average of 44, according to Track Data, suggesting larger price movement.

Research In Motion Limited (RIMM) October 45 call volatility decreased 4%.

Chelsea Therapeutics International Ltd. (CHTP) October 7.50 call volatility decreased 57%.

The markets opened lower this morning and have continued to slide all day, mostly due to poor reports on manufacturing and unemployment. Still, for the third quarter both the DJIA and the S&P 500 indexes gained about 15%. Now, it appears that faith in an economic recovery is wobbling, primarily as a result of expected growth in unemployment and continuing low consumer spending. The federal stimulus program has pumped about $86 billion into the economy so far, but that hasn't been enough to shake loose tight-fisted lenders or cash-conserving consumers.

Here are the numbers::

Dow 9,509.28 -203.00 (-2.09%)
S&P 500 1,029.84 -27.24 (-2.58%)
Nasdaq 2,057.48 -64.94 (-3.06%)

The market seems to want to go up each day as it has relentlessly almost every trading session since April. But yesterday, it had a tiny setback after the FOMC announcement. Today the culprit was housing. The National Association of Realtors said existing home sales declined 2.7% in August. Every economist worth his salt said the number would rise.

Good news on the unemployment front did give the market an early boost this morning. Within an hour, though, bad news on the housing sales front wiped out the gains and moved the major indices into negative territory, where they have remained.

Here were today's unofficial closing numbers:

Dow 9,706.99 -41.56 (-0.43%)
S&P 500 1,050.78 -10.09 (-0.95%)
Nasdaq 2,107.61 -23.81 (-1.12%)

MOST NOTEWORTHY: Airlines, Chelsea Therapeutics and Clearwire were today's noteworthy downgrades:

• Merrill downgraded AMR Corp (NYSE:AMR), Delta Air Lines (NYSE:DAL), Continental Airlines (NYSE:CAL), US Airways (NYSE:LCC) and UAL Corp (NASDAQ:UAUA) to Neutral from Buy citing earnings risk this year from higher energy costs.
  
• Oppenheimer downgraded shares of Chelsea Therapeutics (NASDAQ:CHTP) to Perform from Outperform after their survey suggested physicians believe currently available generic treatments are adequate in neurogenic orthostatic hypotension, which could impact the company's lead drug Droxidopa.
  
• Clearwire (NASDAQ:CLWR) was cut to Sell from Hold at Citigroup on valuation, as they estimate fair value at $13.

OTHER DOWNGRADES:

• Goldman downgraded Kellogg (NYSE:K) to Neutral from Buy and Hershey Foods (NYSE:HSY) to Sell from Neutral.
  
• Piper lowered Orbitz Worldwide (NYSE:OWW) to Neutral from Buy.

MOST NOTEWORTHY: VeraSun Energy (VSE), BioFuel Energy (BIOF), Electronic Arts (ERTS) and Take-Two Interactive Software (TTWO) were today's noteworthy initiations:

• Citigroup initiated shares of VeraSun Energy (NYSE: VSE) and BioFuel Energy with Buy ratings, as the firm believes the ethanol industry is reaching an inflection point as profitability should be much improved in 2008.

• BioFuel (NASDAQ: BIOF) was also initiated with a Hold rating at AG Edwards on valuation and an Overweight rating at JP Morgan, who believes BioFuel has good growth prospects but trades at a discount relative to peers.

• Electronic Arts (NASDAQ: ERTS) was initiated with a Neutral rating at Cowen, citing the company's rich valuation and mixed growth outlook.

• Cowen resumed coverage of Take-Two Interactive Software (NASDAQ: TTWO) with an Outperform rating, as the firm believes TTWO is positioned for a strong 2H07 given the Grand Theft Auto IV and other titles...

OTHER INITIATIONS:

• CDC Corporation (NASDAQ: CHINA) was initiated with a Buy rating and $12 target at Montgomery.

• Oppenheimer started shares of Chelsea Therapeutics (NASDAQ: CHTP) with a Buy rating and $12 target.

• Banc of America initiated shares of Charming Shoppes (NASDAQ: CHRS) with a Neutral rating and $11 target.

• Raymond James initiated shares of Geokinetics (AMEX: GOK) with a Market Perform rating.

• King Pharmaceuticals (NYSE: KG) was initiated at Goldman Sachs with a Neutral rating and $19 target.

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