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The US options market saw another busy week of trading as stocks moved mostly higher. During the past five trading sessions, the S&P 500 Index added roughly 35 points or slightly less than 3 percent. Meanwhile, 31.3 million puts and 38.8 million calls traded across the US options exchanges.  Among the more noteworthy trades for the week ended August 8, 2008: bullish trading on ISE Euro FX Index (.EUI), well-timed call buying in Sprint Nextel (S), a bullish butterfly spread on Freeport McMoran (FCX), a substantial bull ratio spread on Washington Mutual (WM), and bullish short-term trading on the Market Vectors Gold Mining Fund (GDX).

ISE Euro FX Index (.EUI)

The ISE Euro FX Index saw bullish order flow Thursday. The EUI is a cash index that tracks the performance of the euro against the dollar. Like other ISE currency indices, it is dollar-based and therefore will move higher with the dollar. Thursday, for example, the euro started feeling some downward pressure after the European Central Bank [ECB] voted to leave interest rates unchanged and ECB President Trichet noted downside risks to growth. The EUI rose from 64.9 to 65.5. The move triggered bullish order flow in the .EUI and, in the options market, volume rose to 40 times the usual. More than 5,000 calls and 720 puts traded on the session. 3,000 of the December 66s and 2,000 of the March 66.5 calls traded offerside, which indicates some players probably initiated opening buy orders. The trade is working out well so far, as the euro caved in on Friday and suffered its biggest loss in eight years. EUI finished the week at 66.64 and its best levels in more than five months.

Bullish Flow on Sprint Nextel (S)

Call buying picked up in Sprint Nextel midday Thursday. The stock was trading near $7.05 around 15:00 Eastern time when WhatsTrading.com noted "25,000 calls have traded on the day, compared to 8,300 puts. The November and September 8 calls are the most actives, with almost 15,000 contracts traded and 93 percent of that volume trading offerside." The uptick in call buying came less than an hour before Sprint announced it was canceling a massive offering of convertible securities, which sent shares rallying to an intra-day high of $8.55 a share. S then pulled back, but then rallied again Friday to settle the week at $8.72 a share. Those November and September 8 call buyers that surfaced Thursday were well rewarded for their exceptional (and eyebrow-raising) timing.

Flying with Freeport McMoran (FCX)

Freeport McMoran saw active trading Thursday after Bloomberg released a story indicating that Vale do Rio Doce (RIO) is looking for acquisitions and FCX might be one of them. According to the report, an acquisition in the copper or coal industry could help spur growth amid slowing profit growth due to falling nickel prices. RIO raised $12.06 billion last month in a stock sale for takeovers and expansion, according to CEO Roger Agnelli. In June, JP Morgan said FCX is the most likely acquisition target for RIO.

In the options market, one player seems to take a bullish view on the situation and entered a substantial butterfly spread on Freeport McMoran Thursday. With the stock near $86.00 a share, 6,000 of the FCX January 115 calls traded on the bid for $4.29 a contract on the ISE. At the same moment, 3,000 of the Jan 135s traded offerside for $1.86 and 3,000 of the Jan 115s offerside for $9.91. The action has all of the signs of a substantial butterfly spread, with the 115s forming the body and the 135s and 95s, the wings. If so, the spread has a profit zone well above the current stock price (roughly $98.25 and $132), with a huge payoff if FCX settles at $115 a share at January options expiration.

Bulls Circle the Wagon on Washington Mutual (WM)

Washington Mutual (WM) call options were active Friday. 176,000 contracts traded, compared to 45,000 puts. Some of that volume can be traced back to a substantial 1x2 ratio spread that was opened in afternoon trading. 10 minutes before the closing bell, an order for 42,000 January 7.5 calls traded askside for 81 cents a contract. Meanwhile, two orders of 42,000 January 12.5 calls traded bidside for 17 and 16 cents a contract.

The activity is probably part of a 1x2 spread, where the strategist is buying the 7.5s and selling two times more 12.5s, for a net debit of 48 cents (per 1x2). The stock finished the session down 39 cents to $4.38 and well below the profit zone. For the spread to generate profits, WM needs to rally up to $8.00 a share. Substantial profits are possible if the stock moves to $12.5. The upside breakeven is roughly $17 per spread and after that the trade starts to sour, with significant losses possible if the stock makes a dramatic move higher. In short, despite WM's recent malaise, one player seems to have made a substantial bet that the stock can make a move back above $8.00 per share and perhaps towards $12.5 between now and January options expiration.

Market Vectors Gold Miner ETF (GDX) Makes a Move

The Market Vectors Gold Mining ETF had a rough week amid falling gold prices. The GDX, which holds 31 mining companies including Newmont (NEM), Barrick Gold (ABX), and Range Gold (GOLD), suffered a 14.3 percent loss on the week after the precious metal fell to three month lows just below $860 an ounce.  

One strategist seems to be taking a contrary view, however, and opened a significant August 39/41 bullish spread on the GDX at around 11:15 Eastern Friday. At that time, an order for 10,000 of the 39s traded offerside for $1.75 a contract on the ISE. Meanwhile, another 10,000 of the 41s traded bidside for 75 cents. The action has all of the characteristics of opening a bull spread, where the strategist is risking $1.00 (per spread) for the potential of making $1.00 if GDX closes at or above $41 a share by options expiration, which is just five trading days away.

Disclosure: None

Source: WhatsTrading's Weekly Top 5 Options Ideas: Euro, Sprint, Freeport-McMoran, WaMu, GDX