The relative paucity of activity in the options market of late continued despite an expiration Friday and an equity market that was getting shellacked.

Some market watchers, however, said that the selling in the market could abate soon with the market snapping back at least over the near term.

Jay Shartis, the options strategist at

R.F. Lafferty

, a New York brokerage, said that he thought some of today's selling was related to expiration. Typically, options expiration produces unusual volatility as traders adjust positions into future months and are forced to buy and sell stock to fulfill the terms of outstanding options contracts.

Meanwhile, the

Chicago Board Options Exchange

equity put/call ratio was sharply higher Friday, rising to 72 from Thursday's closing level of 47. Also, the

CBOE volatility index

perked up Friday, climbing 5.69% to 28.40.

The volatility index, also known as the VIX, rises when put-buying in options on the

S&P 100

increases. The indicators reflect sentiment in the market, and the more anxiety those indicators display, the more positive signs they are for contrarians.

While the decline in the market was creating discomfort, activity in the options market, according to some, hasn't been particularly robust.

"Today is the slowest expiration I can remember in a long time," said one Chicago-based options pro, noting that few were initiating new positions.

One West Coast trader echoed the sentiments of the Chicago options pro on the general quiet of the options market Friday. "It's really slow," the trader said. "There's not a whole lot of action."

The trader added the morning's quiet may evolve into a flurry of trading later in the day, perhaps in the last half-hour of trading.

Options on

Allstate

(ALL) - Get Report

have been juiced up lately, along with its stock, as traders speculate that the insurance titan will be taken over. Shares of Allstate were trading up 11/16 to 27 1/16 Friday.

However, a

Merrill Lynch

research report on the prospects of a buyout of Allstate was skeptical. Merrill did note that there were factors that would make Allstate attractive, including its depressed valuation, highly visible brand name and the company's policyholder base of 14 million households. However, the report also noted that "we believe buying interest in Allstate is more limited than many investors perceive."

The company's size would be prohibitive for some potential buyers, Merrill said. Insurance giant

AIG

(AIG) - Get Report

has been mentioned in press accounts as a possible interested party, but AIG hasn't shown the desire to be among the top two auto insurers in the country, according to the Merrill research report. If AIG bought Allstate, it would put AIG in that position.

Merrill said there could be some interest from European insurers; however, the firm pointed out that most of them are interested in life insurance or asset management.

That hasn't stopped speculators from playing in the options market. There is a significant amount of open interest in Allstate call options, suggesting some traders are betting at least there's more upside on the way.

Open interest -- the number of contracts in existence -- on its June 25 calls was nearly 4,900 contracts at Thursday's close; June 27 1/2 calls had open interest of 4,036; July 25 calls had open interest of 7,974; and open interest on the June 27 1/2 calls was 7,292.

Friday activity in Allstate options produced heavy volume in the June 27 1/2 calls on the

American Stock Exchange

, where nearly 1,000 contracts have changed hands. The calls were trading at 2 1/16 ($206.25), up 1/4 ($25). The June 25 calls were seeing interest on the CBOE, with 550 contracts trading. The calls were unchanged at 3 1/8 ($312.50).