Good news for the tobacco industry out of the Supreme Court has sparked a flurry of trading in

Philip Morris

(MO) - Get Report

call options Tuesday.

The jump in call-option trading on Philip Morris came after the Court ruled that the

Food and Drug Administration

didn't have the authority to regulate tobacco products. The Supreme Court news beat out bad news for the industry from California. A state-court jury there Monday ordered Philip Morris and

R.J. Reynolds Tobacco

(RJR)

to pay $1.7 million in compensatory damages to a smoker who contracted lung cancer.

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Shares of Philip Morris initially soared on the news of the Supreme Court ruling, but have since fallen back. Big Mo was up 3/8 to 20 5/16, off a high of 22 1/8. In options, 4683 April 20 calls have traded on the

American Stock Exchange

. The April 20 call options were at 1 1/2 ($150 per contract), up 3/16 ($18.75). There was plenty of action in the April 22 1/2 calls also, with 3251 contracts trading on the Amex. The April 22 1/2 calls were lately at 3/4 ($75), up 3/16.

Meanwhile, put action was heavy in the

Nasdaq 100

(QQQ) - Get Report

unit trust. The QQQ was off 13/16 to 106 7/8 after trading as low as 103 9/16 intraday.

Chris Johnson, managing quantitative analyst at

Schaeffer's Investment Research

, an options trading and research firm in Cincinnati, said the QQQ bottomed out intraday at around 103, which is where peak open interest is for puts. Open interest for the April 103 puts is 60,440 contracts. That high level of put open interest indicates to him that there's a lot of potential support for the underlying security at that level.

As for the put action in the Nasdaq 100 unit trust, 4926 contracts of the April 110 puts have traded, with significant action in the April 105 puts and the April 106 puts also.