Options in Motion: Time Warner

Altria, Delta and Northwest are also active.
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Many options traders appeared to be squaring away their positions Thursday in preparation for the upcoming expiration.

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 2.6% to 12.57. The CBOE Nasdaq Volatility Index, a measure of the implied volatility of the Nasdaq 100, was recently up 1% to 15.73.

Time Warner

(TWX)

had the September/October 18 call spread trade 30,000 times following a published report that the company is in talks with

Microsoft

(MSFT) - Get Report

about selling a stake in America Online.

Call buyers also traded the October 19 Time Warner calls 5,500 times and the October 20 calls 4,100 times. Time Warner's shares were up 49 cents, or 2.7%, to $18.41 on the news.

Microsoft's options saw limited action on the report. The September 22.50 puts traded 6,400 contracts and were higher by 10 cents. The stock was unchanged at $26.31.

Airline stocks saw heavy option action on the news of bankruptcy filings by

Northwest Airlines

(NWAC)

and

Delta Air Lines

(DAL) - Get Report

.

Northwest's September 2.50 puts have traded 7,600 times and were up 70 cents. The October 2.50 puts have traded 16,600 contracts, and the October 2.50 calls have traded 5,500 times. Meanwhile, 3,600 contracts on the January 2.50 puts have traded. The stock was down 90 cents, or 48.1%, to 97 cents.

Delta saw its January 5 puts trade 12,000 contracts and the January 2007 2.50 puts trade 20,000 times. The stock was up 18 cents, or 25.4%, to 89 cents.

Altria Group

(MO) - Get Report

had heavy call buying in almost all of its months. The September 75 calls have traded 12,400 times, and the deep in-the-money January 65 calls traded 19,400 contracts. The March 75 calls have traded 15,000 times. The stock was up 58 cents, or 0.8%, to $72.21.

Google

(GOOG) - Get Report

saw a flurry of activity in its September options after the company priced a stock offering at $295 a share. The September 300 calls have traded 23,000 contracts, and the 310 calls have traded 18,000. The 300 puts have traded 27,000 contracts, while the 290 puts have traded more than 17,000. The stock was up $1.95, or 0.6%, to $304.95.

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