Option volatility was being sucked out of the marketplace Tuesday as traders opted for a wait-and-see approach amid a busy week for economic data.

The CBOE Market Volatility Index (VIX), which is based on the implied volatility of the

S&P 500

options and is used as a gauge for fear in the market, was recently down 2.4% to 11.89. The CBOE Nasdaq Volatility Index, a measure for the implied volatility of the Nasdaq 100, lost 1.9% to 14.40.

General Motors

(GM) - Get Report

had the January 2008 puts striking at 10 trade 24,000 times. The trading of these out-of-the-money puts is most likely hedging taking place in the credit-default market.

About 11,000 January 2008 puts striking at 20 were swapped, equating to almost one-third of the open interest. The long-term options of GM have been active lately because of the cost and competition concerns weighing on the automaker and the broader sector. Shares of GM were down 51 cents, or 2.2%, to $23.23.

Guidant

(GDT)

options were active after

Johnson & Johnson

(JNJ) - Get Report

announced it will now acquire the company for $63.08 a share, which is down 17% from its original offer of $76 a share.

The November 60 puts have traded 9,400 contracts and fell $2.40. With the stock trading higher on the news and some of the near-term uncertainty out of the way, these puts are now essentially worthless. The January 60 calls have been exchanged 11,600 times, and the January 60 puts traded 12,000 contracts. The stock was jumping $4.80, or 8.3%, to $62.55.

Altria Group

(MO) - Get Report

had the November 75 calls trade 23,000 times. With the stock's weakness, the calls were falling 45 cents. Since the 75 strike has the greatest open interest for the November options, there's a good chance the stock will gravitate toward that strike approaching Friday's expiration.

Also, the December 75 calls have traded 13,200 contracts and were down 20 cents. The stock slipped 34 cents, or 0.6%, to $74.26.

Other active options included

Honeywell International

(HON) - Get Report

,

Valero Energy

(VLO) - Get Report

and

Amazon.com

(AMZN) - Get Report

Honeywell's December 40 calls traded 11,800 contracts, double the open interest. The stock was off 13 cents, or 0.4%, to $36.46. Valero's November 100 calls were exchanged 8,300 times and tacked on 65 cents. The stock gained $1.34, or 1.3%, to $101.62.

Elsewhere, Amazon saw the November 45 calls trade 7,700 times, while its shares climbed $2.44, or 5.7%, to $44.97.

To view Mike Marino's video take on today's option action, click here.