Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Mirant Corp. (NYSE:MIR) implied volatility Elevated at 32 as MIR trades near Record levels.

MIR is expected to report full EPS & hold a conference call on 3/5. MIR has been frequently mentioned as a potential candidate for announcing a recapitalization or a share repurchase. MIR call option volume of 1,044 contracts compares to put volume of 3,001 contracts. MIR overall option implied volatility of 32 is above its 26-week average of 26 according to Track Data, suggesting larger price risks.

New Century Financial Corp (NYSE:NEW) low cost deep OTM April & May 5 put spread trades as Hedge.

NEW, a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down 37c to $15.47. NEW deep out of the money April 5 puts traded 4,715 contracts near the bid at .12 & .13 cents above its theoretical value of .01 cent. NEW deep out of the money May 5 puts traded 5,568 contracts on the offer of .40 cents above theoretical value of .04 cents according to Track Data, suggesting spreaders paying up to hedge risk.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX up .20 to 10.22.

XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) -- option implied volatility decreases after SIRI merger of equals announced. XM Satellite Radio is recently up $1.70 to $15.67. SIRI and XMSR to combine in $13 billion merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share. RBC Capital Markets says "Incremental synergies for XMSR and SIRI should be approximately $7.96/share and $1.73/share. We estimate 50%-75% probability transaction will be completed." XMSR April option implied volatility of 49 has decreased below its 26-week average of 53 according to Track Data, suggesting decreasing price risks.

Sirius Satellite Radio Inc. (NASDAQ:SIRI) -- implied volatility suggested less risk in XMSR deal. Sirius Satellite Radio is recently up .27 to $3.97. SIRI is expected to report EPS on 2/27. Bear Stearns says "The deal would need to gain regulatory approvals to be consummated -- at this point, we have yet to form an opinion on whether the deal would receive these regulatory approvals." SIRI June option implied volatility of 39 is below a level of 47 from last week according to Track Data, suggesting decreasing price risks.

Option volume leaders today were: XM Satellite Radio Holdings Inc. (NASDAQ:XMSR), Sirius Satellite Radio Inc. (NASDAQ:SIRI) Apple, Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT).