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The major averages are broadly higher, as investors cheered manufacturing data and a rally in commodities prices to start the New Year. Overseas markets and commodities moved higher before the start of trading in New York after Fed Chairman Ben Bernanke said Sunday that he is unlikely to raise rates to fight asset bubbles. Crude oil is up $2.17 to $81.53 a barrel and gold jumped $22.50 to $1118.70 an ounce.

Meanwhile, the early advance gained additional momentum after ISM said its gauge of manufacturing activity improved to 55.9 in December, up from 53.6 in November and better than the 54.3 economists had predicted. An analyst upgrade of Intel (NASDAQ:INTC) seemed to help as well. INTC is up 2.7 percent and one of 27 Dow stocks moving higher after Robert Baird analysts upgraded the stock to Overweight.

The Dow Jones Industrial Average is up 175 points and at session highs heading into the final 75 minutes of trading. The NASDAQ added 39. The CBOE Volatility Index (.VIX) lost 1.43 to 20.25. Options volume, which hit new records in 2009, is running a bit higher than usual. About 3.9 million puts and 5.85 million calls traded so far (a ratio of .67, compared to a 22-day average of .68.)

Bullish Flow

NewsCorp (NASDAQ:NWSA) is up 29 cents to $13.98 and Feb 12.5 calls are seeing interest. The top trade is 1249 contracts at 85 cents on ISE. It was part of a sweep of 3500 contracts and an opening customer buyer, according to ISEE data. It comes after News Corp (NWSA) and Time Warner (NYSE:TWC) reached a deal that will keep FOX broadcasting stations on the cable network.

Vale (NYSE:VALE) is up 68 cents to $29.71 and testing December resistance highs just below $30 per share and the Feb 27 - 32 risk-reversal trades 4000X. Looks like an investor pays 8 cents to buy calls, sell puts, and open new positions in both contracts. It was probably tied to a block of 119K shares at $29.72 that traded at about the same time.

Bearish Flow

BofA (NYSE:BAC) is up 40 cents to $15.46 and BAC Jan 19 call was the most actively traded contract in the first hour of trading in 2010. The 32.5K traded included a block of 14.1K traded bid-side for 3 cents per contract, which might be a seller liquidating a position on the view that, even after today's gain, a move to $19 by the Jan expiration (11 days) is unlikely. BAC Feb 15 puts is today's 2nd most active, with a block of almost 30K contracts traded bid-side at 73 cents — possibly a closing seller as well.

Implied Volatility Movers

Las Vegas Sands (NYSE:LVS) has been grinding higher, now up $1.50 to $16.44, near session highs, after UBS upgraded the stock to Buy. The firm said they expect Macau market to grow 18 percent year-over-year growth in 2010 and are raising their price target to $20 from $19. Options volume is running 3X the normal levels for midday, with 36K calls and 18K puts traded. Jan 16 calls, Jan 17.5 calls and Jan 15 puts are the most actives, as players jockey for position in anticipation of the stock's next move. Implied volatility (average) is up 7 percent to 56.

Unusual Volume Movers

Cisco Systems (NASDAQ:CSCO) is seeing 2X average daily trading volume, with 100,000 contracts traded and call volume representing 77 percent of today's activity.

Morgan Stanley (NYSE:MS) is seeing 2X average trading volume, with 77,000 contracts traded and calls representing 58 percent of today's trading activity.

Micron Technology (NASDAQ:MU) is seeing 2X normal trading volume. 75,000 contracts have traded, with call options representing about 73 percent of today's volume.

Unusual volume (two times or more than normal average volume) is also being seen in Alcon (NYSE:ACL), Weatherford (NYSE:WFT), and EMC.