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

Volatility Index S&P 500 Options-VIX down .47 to 10.49 after FOMC leaves rates unchanged at 5.25%

Comcast Corp. -(NASDAQ:CMCSK) option prices reveal subtle risks as expected into 2/1 EPS. Comcast will report EPS before the open on 2/1. Comcast February 45 straddle is priced at $2.30, above its theoretical value of $1.96 according to Track Data, suggesting increasing near term price fluctuations risks into EPS.

Google Inc.-(NASDAQ:GOOG )February option implied volatility elevated as expected into EPS. Google will report EPS after the close tonight. American Technology says "expect a solid report after close; Flat stock may reflect lower expectations." Google call option volume of 84,845 contracts compares to put volume of 54,692 contracts. Google February option implied volatility of 45 is above its 26-week average of 34 according to Track Data, suggesting larger price risks.

Option volume leaders today were: Altria Group Inc. (NYSE: MO), SanDisk Corp. (NASDAQ:SNDK), Citigroup (NYSE:C), Bristol Myers Squibb (NYSE:BMY) and Microsoft Corp.(NASDAQ:MSFT).

Tom Slee of Internet Wealth Builder thinks blue chip Altria Group Inc. (NYSE: MO) has "a lot of upside potential' and has chosen the stock as his latest special situation buy.

He notes that while MO is a consumer products goliath with global sales of about $100 billion per annum, at the end of the day, it is a tobacco company, with 71% of its operating profit results from the U.S. and International tobacco divisions."

He admits that many investors might wish to avoid the stock based on moral grounds, but he adds, "Despite its role in cigarettes, one thing is certain: Altria is an extremely well-managed company."

(I'd add that it is now one month since I quit smoking, so this write-up should not in any way be viewed as an endorsement of the firm's tobacco business.)

Slee continues, "Despite declining cigarette use in North America, the firm's earnings have still grown at almost 8% a year for the last decade. Further, the company distributes almost 60% of its profits as dividends."

The big news according to the advisor is management's belief that it can increase shareholder value by breaking-up its holdings. He notes that the break-up was scheduled to take place a few months ago but put on hold because of the $200 billion Schwab lawsuit overhanging the tobacco industry.

However, Slee believes that the recent elections were positive for cigarette manufacturers and sees a window of opportunity in which the company might move ahead with a restructuring. He notes, "There is an excellent chance that Altria will announce plans to spin off Kraft on Jan. 31 to shareholders."

His bottom line for more aggressive investors willing to consider a special situation is to buy Altria at $84 with a target of $98, anticipating that a distribution of Kraft might provide a bonus.

Steven Halpern is the editor of TheStockAdvisors.com, a free daily overview of the latest stock recommendations from the financial newsletter community.

A federal appeals court is reviewing the decision to let a group of smokers file a class action suit that claims "light" cigarettes were marketed as being safer than regular smokes.

While it is hard to determine what damages the suits could bring to tobacco companies if they are successful, the plaintiffs claim that big tobacco brought in between $120 billion and $200 billion in "light" sales. Why their lawyers cannot get to a number in a slightly tighter range is hard to understand.

On Friday, when the news hit the wire, shares in Altria Group (NYSE:MO), parent of the largest tobacco company Philip Morris, rose almost $1.50 to just under $85. As the litigation has favored Altria and its counterparts, the company's stock has gone from $28 in May 2003 to the current level.

However, the "light" cigarette wrinkle is fairly new. Older suits were based on the simple premise that tobacco companies hid the risks of smoking and marketed products that they knew were dangerous. The treachery alleged in the "light" case is a bit more subtle. And, perhaps more complex.

Altria is at a high, but the fat lady has not sung. There is still a fair amount of risk.

Douglas McIntyre is a partner at 24/7 Wall St.