Call Buyers Buck Skeptics

Options investors seemed undaunted by the

Dow's

fall yesterday and appeared to be expecting the index to make another climb toward 10,000 as they got back into various plays in several financial stocks.

"It's more speculative than defensive today," says a surprised Michael Schwartz, chief options strategist at

CIBC Oppenheimer

. Overall, however, the market remains tentative, possibly as traders wait for further information on the

NATO

strikes against Yugoslavia, Schwartz says.

The put/call ratio, however, was telling a somewhat different story. The activity measure rose to 0.51 this afternoon on equity options, meaning calls were outpacing puts by a 2-to-1 margin. Lately, the indicator has been posting a 3-to-1 difference, so there is a certain bearish element to the action today.

Despite the overall need for protection, financial stocks saw speculative call action today and some desire to just ride out the current volatility.

For example, consumer lender

Household International

(HI) - Get Report

saw heavy action it its April and May out-of-the-money 45 calls, with about 5,000 contracts trading in each month. The twin activity was likely an early roll out of the April contracts, according to Joe Sunderman, senior research analyst for

Schaeffer Investment Research

. "This looks like a bullish extension into May," he adds.

The investor looked to be selling -- or potentially closing -- the April 45 contracts at 1 1/8, or $112.50 per contract, and using the funds to defray the cost of the May 45 calls at 2 3/16, or $218.75 per contract, for a total cost of more than $1 million.

Household, which announced a $2 billion stock buyback recently, was up 1 to 43 15/16 this afternoon.

Another financial player,

Bankers Trust

(BT)

, also saw heavy action, but it was on both sides of the fence.

The bank, slated to be acquired by

Deutsche Bank

, saw action in its out-of-the-money July 90 calls and July 60 puts, which traded about 4,000 contracts each. Also, the bank saw a large straddle in its April 80 calls and puts, with 4,000 contracts moving in each strike.

The combination of the straddle and the out-of-the-money trades was intriguing, Schwartz says, suggesting it all could be part of a bolder strategy. "If the investor closed out his July 90 position to create this straddle in the front month, it's pretty aggressive," he says. BT was at 87 5/8, up 1 1/4, this afternoon.

One the speculative put side,

MBNA Corp.

(KRB)

, a bank holding company, saw some large negative speculation as 1,500 contracts in its in-the-money May 22 1/2 puts moved against no open interest, suggesting new money at play. The trade looked to go out at the bid price, indicating investors may have been buying up the puts. MBNA's stock was trading at 21 3/4, down 11/16, this afternoon.

Texas Instruments

(TXN) - Get Report

saw some activity for a second consecutive day as an investor placed a put/call straddle on the company's April 75 strikes. The investor moved 3,650 contracts in the deep-in-the-money April 75 calls at 19 3/4, or $1,975 per contract, and 4,350 contracts in the April 75 puts. Both trades went out against lower open interest.

On

Tuesday, the computer chip company fell 9 1/4 to 91 1/4 after concerns arose about falling sales. The drop led to heavy action in the company's front-month puts, especially the April 95s and 100s.

Today, TI was up 2 11/16 to 93 15/16.

There were some runaway prices in

Revlon

(REV) - Get Report

options today, following reports that the cosmetics company was being wooed, possibly by

Unilever

(UN) - Get Report

.

With the shares rallying 4 3/8 to 21 7/16, the April 20 calls posted their second consecutive strong volume day. Almost 350 contracts traded, and the premium spike sent the price up to 3 5/8 ($362.50) from just 1/2 ($50) at Tuesday's close.

Helping the shares along was traffic on Revlon's

Yahoo!

(YHOO)

chat boards.

By noon Wednesday, 57 messages had already been posted discussing the takeover rumors. Some of the posts were specific in naming potential buyers and a price like the message from one: "REV could be sold in low 30s. Unilever and P&G very interested."

But as the morning progressed and no deal was forthcoming, a tone of skepticism spread on the boards. At 11:47 a.m. EST James Tilton wrote: "No deal, no deal. I just got out."

Unilever, the Anglo-Dutch consumer products conglomerate, already has some prestige cosmetics brands, including

Calvin Klein

and

Elizabeth Taylor

brand perfumes.

Just a month ago, the company handed back shareholders a special dividend, saying it couldn't find acquisitions that would generate value for shareholders. That put a quick damper on rumors that the company would buy

Heinz

(HNZ)

.

A Unilever spokesman says the company doesn't comment on market rumors.

Staff reporters Suzanne Kapner and Katherin Hobson contributed to this article.