The major averages are rallying on better-than-expected economic data. The table was set for a morning advance after a report on China industrial activity showed a third consecutive month of improvement and, in the US, data on consumer spending/incomes came in ahead of expectations.

Higher commodity prices also helped support gains in overseas markets and, when the bell sounded on Wall Street, the Dow bounced in morning trading. The rally was extended after two separate reports on construction spending and manufacturing [ISM] also exceeded economist forecasts.

The Dow Jones Industrial Average is up 200 points midday and trading is active. Approximately 4.7 million calls and 3.3 million puts traded in the options market during the first two hours of trading.

GM, which is expected to announce bankruptcy later today, is one of 25 Dow stocks moving higher. Shares are up 12 cents to 87 cents, as some investors bid the stock price higher on hopes the company can come out of bankruptcy and reward patient shareholders. GM June 1 call is today's most actively traded contract, with heavy selling seen-probably on the view that a move beyond $1 before the June expiration (18 days) is becoming much less likely.

Meanwhile, Cisco (CSCO) is helping the NASDAQ. Shares are up 82 cents to $19.32 and more than 30K June calls traded on news the company will replace GM in the Dow. Travelers (TRV) will replace Citi (C).

Spyders (SPY) June 90 puts are active despite today's rally. SPY is up $2 to $94.53 and more than 96K traded, including a block of 50K contracts on the ISE for $1.01, which was an opening customer buy order, according to ISE sentiment data.

Finally, the CBOE Volatility Index (.VIX) seems to be straying from its normal patter. After hitting a low of 28.45 early, VIX is up .28 to 29.20. The gains in the "fear gauge" comes ahead of this week's busy economic calendar (including jobs data Friday) and seems to reflect the view that market volatility might stay elevated despite the big gains in the major averages Monday.