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Option traders were taking their cues from the headline-makers such as

FedEx

(FDX) - Get FedEx Corporation Report

and

General Motors

(GM) - Get General Motors Company (GM) Report

on Wednesday.

After FedEx topped Wall Street's quarterly financial estimates and raised its guidance, its in-the-money January 100 calls traded 5,000 contracts and rose $2.40 to $5.10. The 105 calls traded 5,100 times, almost equaling the open interest. Open interest is the total number of option contracts that aren't closed on a particular day.

The activity in the calls could have been traders closing out long positions to take advantage of the move in the stock, which was recently higher by $5.17, or 5.3%, to $103.66.

GM shares rose slightly despite the announcement that Kirk Kerkorian sold 12 million shares to lock in a tax loss. The January 20 puts traded 13,000 contracts and were down 5 cents to $1.55.

Meanwhile, the March 17.50/20 strangle traded 9,000 times. With this strategy, the 17.50 puts and 20 calls are purchased simultaneously, and the buyer expects the stock to make a large move in either direction. GM's shares were tacking on 3 cents to $19.88.

Seagate Technology

(STX) - Get Seagate Technology PLC Report

saw its January 20 calls trade 2,300 times after it set plans to buy

Maxtor

(MXO)

TheStreet Recommends

.

Seagate's January 17.50 puts changed hands 1,200 times for 15 cents. The puts were most likely purchased to protect against a long position in case the deal falls through. Shares of Seagate climbed 37 cents, or 1.9%, to $19.97.

As for Maxtor, its January 5 calls were swapped 2,100 times and rose $1.70 to $1.80. The April 5 calls traded 3,800 contracts, gaining $1.40 to $1.90. Shares of Maxtor were up $2.30, or 51%, to $6.82.

Traders weren't rewarding all names, however.

Electronic Arts'

(ERTS)

January 50 and 55 puts traded a total of 14,500 contracts after the company issued a profit warning. The stock was down 36 cents to $52.75.

IBM

(IBM) - Get International Business Machines (IBM) Report

and

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

were also among the most actives.

IBM's January 85 calls traded 7,100 times, and Cisco's January 17.50 calls traded 13,300 contracts.

More broadly the market's "fear gauge," the CBOE Market Volatility Index, fell 6.2% to 10.50. The VIX, as its known, is based on the implied volatility of the

S&P 500

options.

The CBOE Nasdaq Volatility Index, which measures the implied volatility of the Nasdaq 100, was down 2.6% to 13.77.

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