Today, we have seen more than 7,500 April 70 calls change hands for 25 cents per contract, which was the asking price at the time (suggesting buying pressure). This compares to existing open interest of just 3,100. Breakeven for this particular strategy is $70.25, so the call buyer needs SHW to move nearly 7% higher by April 16 to put these calls in profitable territory.

It's time to get serious about home builders again, and today I started building a position in KB Home (KBH) using options. Since the collapse of the residential real estate market three years ago prognosticators have been debating when the home builders might be worthy of investing your precious coin of the realm.

As is to be expected in these volatile times most were either too optimistic or pessimistic and few got it right. Like many stocks the home builders appear to have bottomed last March. In the case of KB Home shares were available at $10. Today they have been trading between $17.64 and $18.00 per share, up 80%, although it has been a rocky road.

That is a very healthy return, but there is much more upside to come. How would you like to make 43% quick? Yeah me too!

Within the first hour of the trading day, option traders were piling into Tyco International (TYC) calls, selling roughly 4,000 of the April 37 calls for 65 cents. These options are out-of-the-money by slightly more than a dollar and are easily the most-active option trading across Tyco today.

Given that open interest at this strike was just 2,283 heading into today's trading, it is plausible that today's volume traded to open. The price action suggests these calls were sold to open, which is a bearish to neutral strategy. The investor in question may already own TYC shares and could be selling these upside calls as a hedge against modest downside during the next two months.

With earnings now out of the way for Abercrombie & Fitch (ANF), option traders are looking for the stock to stay in a short-term range (at least for the next few weeks).

Shortly after today's opening bell, a trader simultaneously sold 6,000 each of the March 35 puts and March 35 calls, creating a short straddle. A straddle seller is essentially expecting limited volatility in the underlying stock over the option's lifespan. The closer ANF finishes to the straddle strike (35) at expiration, the better it is for the seller. In fact, for the seller to retain the entire credit collected today, ANF would have to close right at 35 on March expiration in about four weeks.

UAL Corp. (UAUA) shares have had quite a 2010, gaining roughly 23% year-to-date and rocketing 17% higher last Tuesday amid a broad rally in the airline sector. Earlier today, the stock hit a fresh 52-week high but has since retreated about 1.5%.

With the stock at historical highs, some option traders are predicting that a pullback is in the offing. The near-term March 15 puts have seen heightened activity today, with nearly 40,000 contracts trading in the first four hours of the session. Heading into today, this out-of-the-money put was home to fewer than 9,000 contracts, suggesting that the bulk of today's volume is being traded to open (and will translate as new open interest tomorrow).

Alcoa Inc. (AA) kicked off earnings season last night -- with mixed results -- but Intel Corp. (INTC) will mark the unofficial beginning of the tech earnings season when it reports after the close on Thursday. Analysts are expecting per-share earnings of 30 cents, a wide improvement over the fourth quarter of 2008, when Intel banked four cents per share.

Although January options do not expire until Friday (the day after Intel reports), some option traders chose to scoop up call positions in the February series during Monday's trading. These later-dated options provide a little more time value and a few more weeks for Intel to make a move.

It's a slow day in the options market, and investors are expecting a slow couple of months in terms of Dell (DELL) price action - and they are taking on a lot of risk to bet on this.

The January 14 straddle has been active today. (A straddle is the simultaneous purchase or sale of a call and put with the same expiration date and same strike price). In this case, the straddle was sold 8,000 times for $1.47 (an average of 55 cents for the out-of-the-money put and an average price of 92 cents for the in-the-money call). The volume crossed the tape around 11:00 AM Eastern time in two large blocks of 4,000 straddles.

Over the past few weeks the market has been playing a favorable tune but that does not mean that all bad news and negativity have been wrung out of it. There is plenty of fear and suspicion creating volatility.

In many cases this past quarter I have been doing naked puts, in stocks I would be happy to own anyway. I first mentioned this opportunity about seven week ago in Investor fear puts me 'naked' on Wall Street. The actual option position is a "sell to open" put where you get paid today, to pledge to buy something at a later date. These options are available at different strike prices and monthly intervals depending on the company stock.

"Our latest Focus Stock is a bullish play on Dell Computer (NASDAQ: DELL)," says Chris Johnson, who uses both a technical and contrarian-based approach in his Insightful Investor.

"Dell Computer is one of the largest retail computer manufactures in the world. The company supplies businesses and consumers with PC computers, printers, and other peripherals.

"For years, we've watched Michael Dell's company languish, as a slowdown in PC demand combined with a saturation of the PC market caused DELL shares to fall more than 50%. Now, after spending the past four months trading around the 20 mark, the stock may be ready to make a short-term run.

"From a technical perspective, the stock has recently built a bottom around the 20 level. This comes after bouncing from the lows near 18, which also represents the lows during the bear market started in 2000.

I'm puzzled by a lot of things about the market, but the ascent of former Major League Baseball All-Star Lenny Dykstra to the throne of options trading pundit is pretty interesting.

He writes regularly for TheStreet.com (NASDAQ: TSCM), with a focus on the trading of deep in the money calls, one of the less risky options trading strategies out there. A 2006 look at his background in Fortune summed his market experience up this way: "After his mutual funds tanked, Lenny Dykstra leaned on some heavy hitters to transform him from an ex-major leaguer to a minor-league stock picker. At the time, he was talking to the reporter about a stock he owned called Lipid Sciences (NASDAQ: LIPD), which has steadily declined in value since that article. It was the only stock he owned.

Outside of his columns and appearances on CNBC, Mr. Dykstra's media attention has been less than positive. His name appears 28 times in the Mitchell Report on steroid use in baseball, but he declined to speak with Mitchell's team. In an affidavit, for Major Leaguer and steroid user Jason Grimsley accused Dykstra of using steroids.

When I saw the headlines Energizer (NYSE: ENR) buys Playtex (NYSE: PYX), I immediately thought that the late night talk shows are going to have fun with this one. I could see Saturday Night Live writers really putting together an interesting skit involving a very moody bunny. But back to the news...

Energizer made an offer to buy Playtex, and shares of Playtex rose $2.79 (15.9%) to close at $17.97. But then I was curious to look at the option trading on Playtex. Insider trading has been running rampant recently and it is very easy to spot in the options market.

If you look at the option volume on the August 15 Calls (PYX HC) there is an interesting history. There were no options traded for three weeks, then on Tuesday, 51 traded. That is not unusual. Then on Wednesday, there were 5,488 options traded for a high price of $1.00 a piece. That is unusual. Today there were 4,649 options traded for a more than $2.95 a piece. This is just too good of timing to be coincidental. I mean I believe in good luck as much as the next guy, but this certainly appears that someone managed to beat the Friday the 13th curse today.

Now there is a small chance that when the Playtex president DeFeo canceled his speaking engagement on Wednesday, some observers got wind of something as the shares jumped mid-day; but it appears someone got wind that the buyout was coming and decided to make a little bet.

That bet proved to be profitable as $548,800 invested turned into $1,618,960 over the course of three days. Tripling your money over the course of three days is not a bad investment and the way the SEC has been laxly enforcing stuff recently, maybe they will get away with it.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You To Dump A Stock.

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.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

International Securities Exchange Holdings, Inc. (NYSE: ISE) is the top speculative play for 2007 from Bernie Schaeffer, technical trading expert and editor of The Option Advisor. He explains, "ISE is an electronic exchange and the world's largest trading venue for equity options (in terms of volume traded).

"About two years ago, the ISE set a precedent when it became the first U.S. options exchange to debut for public trading. ISE has appeared in the earnings confessional seven times since its trading debut in early 2005. On all of those occasions, the firm has either matched or exceeded Wall Street's earnings expectations.

"Since it appeared on the scene, the stock's path of least resistance has pointed higher, although options players remain wedded to the bearish camp. If the stock continues to advance upon new-high territory, a short-covering situation could be in the offing, eliciting an additional source of buying power.

"Analysts are also skeptical; the most recent Zacks information finds that 10 of the 11 brokerages following the stock have named it a 'hold,' leaving one 'strong sell' rating and nary a 'buy' to be found. The skepticism is palpable on this one, making it a solid contrarian play as 2007 kicks off."

To see Bernie's top conservative investment idea for 2007, click here.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Lennar Corp. (NYSE: LEN) is the favorite conservative investment for 2007 from Bernie Schaeffer, editor of The Option Advisor. He notes, "Lennar, one of the largest homebuilding firms in the U.S., is built on a very solid foundation.

"For more than 20 quarters running, the stock has exceeded or matched analysts' per-share earnings expectations. Despite negative earnings revisions and poor housing statistics during the past few months, homebuilding stocks have actually rallied from their July 2006 lows.

"For its part, LEN is back up near six-month highs. It has been a relative-strength leader when compared to its peers in the outperforming ISE Homebuilders Index. Meanwhile, options players are firmly entrenched in the bearish camp. And, nearly 9% of the equity's float has been sold short.

"Analysts are still leery of LEN, as evidenced by the latest Zacks data. Of the 12 brokerage firms ranking the shares, five have awarded a 'hold' rating while two list the stock as a 'strong sell.' A continued upward drive in the shares could spur some upgrade activity, drawing positive attention toward the equity."

To see Bernie's favorite speculative idea for 2007, click here.

Since posting Keep your eye on Black & Decker last week I have had some discussion among other investors and business associates on-line and off about Black & Decker (BDK). There seems to be a general consensus that it is a solid company with strong fundamentals that has cyclical tendencies. This will be weighing on future earnings and no doubt is reflected in the decline of the stock price and the recent earnings report.

I do not own the stock but have been watching it for several months. It came to my attention through reading various business publications and I thought there was some merit to the positive commentary so I put it on my watch-list $25 dollars ago.

On rare occasion I trade options, (puts or calls), and usually have at least one option outstanding. In my original post I had concluded that BDK may be very close to fair value from all the data I had examined. I was thinking out loud that I may want it $10 cheaper seeking a deep value perhaps around $60 per share so I reviewed CBOE cboe.com/delayedquote/QuoteTable.aspx to get a look at options opportunities.

Since I might be willing to buy shares at $60, could I get paid to do so by selling naked puts (TRADING NAKED PUTS CAN BE VERY HIGH RISK!!) at that strike price. Well two things I learned. First, even with the large 25% decline in stock price of the past few months there was not much money in these options. The second is that there is very little "open interest" at all in doing this trade. There was opportunity at $65, $70 and up, but almost none at $55 & $60. To me this indicates that consensus has developed in the options picture supporting my thesis that we may be at fair value for BDK in the $65 to $70 range in the current market... and that I should keep tracking it for that possible deep value.

BTW, Black & Decker is not a must own stock, nothing is. So I can wait forever, buy something of better value, or do nothing. Patience absolutely pays off.

"You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing." -Warren Buffett

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.