The oil patch was gushing with options activity Wednesday as investors picked over hurricane devastation and merger plays.

Valero Energy ( VLO) options traded heavily after the company said late Tuesday its 245,000-barrel-a-day refinery could take two weeks to repair damage from Hurricane Katrina. But bulls weren't scared off: The September 100 and 105 calls have traded a total of 26,000 contracts.

Meanwhile, the 100 and 95 puts have traded 14,000 contracts. The December 100 and 105 calls have traded 4,000 contracts and the 100 puts have traded 1,000 contracts. Shares of Valero, which is due to close its merger with Premcor ( PCO) Thursday, were up $8.51 to $105.30.

Meanwhile, Chevron ( CVX) saw a buyer of 11,400 contracts of the September 65 calls. The October 65 calls have traded 5,400 times on the day.

In technology stocks, Apple Computer ( AAPL) saw sellers of front-month options. The September 47.5 calls have traded 7,700 times and the 50 calls have traded 4,500 times.

Among individual names, Alcan ( AL) had a large buyer of the January 2006 35 puts. More than 15,500 contracts have traded on the day. Pechiney Rolled Products, which is a wholly owned subsidiary of Alcan, announced Monday that it has extended its current labor contract offer to the United Steelworkers Local 5668 at the Ravenswood, W.Va., aluminum rolling mill until Sept. 3. This put buying could indicate that someone is betting that the contract might not be renegotiated and workers could strike.

Florida Rock Industries ( FRK) saw its calls trade higher as the stock continues to trade up. The September 55 calls were up 1,300% on light volume. The December 60 calls were up 345%.

Tiffany ( TIF) saw buyers of calls after the company released strong earnings and raised its guidance for the year. The September 35 calls were up more than 500% on light volume, while the November 40 puts were down 55%.

The CBOE Market Volatility Index, a measure of implied volatility based on the S&P 100 options and a commonly used gauge of fear in the market, was recently down 1.9% to 13.39. Meanwhile, the CBOE Nasdaq Volatility Index, which measures the implied volatility of the Nasdaq 100, was up 0.5% to 15.43.

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