Dow

components and names in the headlines were seeing active trading in the options market Tuesday, and overall volatility was on the decline.

Drug giant

Pfizer

(PFE) - Get Report

saw interest in its September and October options. The September 25 puts traded 11,000 times, and the September 25 calls traded 5,400 times. The October 22.50 calls traded 1,000 contracts, which is a little more than the open interest for that strike. The October 25 calls traded 6,000 contracts.

WebMD

(HLTH)

saw the January 2007/January 2008 put spread striking at 5 trade 5,595 times. What appears to have happened is that a trader sold the January 2007 5 puts and bought the January 2008 puts with the same strike.

Financial powerhouse

Citigroup

(C) - Get Report

had someone roll the September 47.50/40 put spread into the December 47.50/40 put spread 10,000 times. What this means is that the trader sold the September put spread, in which they had a long position, and used the proceeds to purchase the December put spread. Elsewhere among the December expirations, the 42.50 calls traded 9,800 contracts.

Nextel Partners

( NXTP) saw a seller of the February 30 calls 13,000 times after the company said an arbitration panel denied its request to delay a national rollout of the new

Sprint Nextel

(S) - Get Report

brand.

Call buying in

Albertsons

(ABS)

continued from last week. The October 22.50 calls traded 6,600 contracts and were up 40 cents. The supermarket operator announced on Friday that it would consider a sale of the company. The December 22.50 calls traded 10,300 contracts.

Cisco

(CSCO) - Get Report

had bullish activity in September, as the 17.50 calls traded 6,300 times.

Volatility has decreased since its climb late last week after Hurricane Katrina's lashing of the Gulf Coast. The CBOE Market Volatility Index, 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 2.21% to 13.27. The CBOE Nasdaq Volatility Index, a measure of the implied volatility of the Nasdaq 100, was recently down 3.5% to 15.12.