Like over-the-hill comedians working the Borscht Belt, banged up

Fore Systems

(FORE)

and

PairGain

(PAIR)

found themselves back on what one options pro called the "takeover circuit" this week.

The companies are among the few remaining takeout candidates in the networking sector. And on Thursday, options volume in each was brisk, catching the eye of several traders because of the enticing combination of low stock prices and promising technology. Whether a deal will happen is another question.

On Thursday, PairGain shares rallied and out-of-the-money March and April 10 calls traded more than 1,000 contracts each. Fore showed similar activity with its out-of-the-money March 15 and April 17 1/2 calls trading more contracts than usual.

"Everyone is wondering what's going to be the next networking company taken over, but right now the volume is unquantifiable," said one options pro in Philadelphia. "The premium on the April 15 and 17 1/2 calls in Fore is pretty high."

Halfway through the session today, Fore's options still were trading aggressively. Despite its shares being down 1/4 to 13 13/16, the April 15 calls cost 1 9/16 ($156.25), up 1/16 ($6.25) on volume of just 169 contracts. The price of Fore's puts, however, was also rising, showing some indecision about the firm's outlook.

PairGain, trading up 3/16 to 9 9/16 at midday, also got some mild interest today from options traders. The April 10 calls were trading at a 7/8 ($87.50) premium and were flat.

Some of the smart money could be betting against a takeover by selling calls to M&A optimists. "I think its going to be in the rumor circuit for a long time," said Lillian Seidman of the Seidman-Skupp options team at

Miller Tabak Hirsch

. "When the stocks get to these prices, they become vulnerable takeover targets."

Seidman pointed out that PairGain, for instance, is trading at a 110 implied volatility (the market's estimate of how much a stock has the potential to move) -- an appropriate level for this particular company: "It

should

be a 110 vol," Seidman said. "It's a $10 stock."

Fore Systems' takeout potential is one reason analyst Paul Johnson with

BancBoston Robertson Stephens

tells clients to buy the stock. Fore shares trade at 13 13/16, down from 45 in May 1996.

"In Fore Systems you get probably the best set of ATM engineers in the world," Johnson says. Asynchronous transfer mode is viewed as a primary vertebra in the backbone of large networks.

Fore stumbled three years ago because it targeted the wrong market: corporate networks. Rivals such as

Cascade

, now part of

Ascend

(ASND) - Get Report

, stole an early lead by selling ATM to carriers. In the December quarter Fore earned $11.1 million, up slightly $10.1 million one year earlier.

Fore offers much to a suitor. It has sold its strong carrier ATM switch to customers such as

UUNet

(now part of

MCI WorldCom

(WCOM)

and

Level 3

(LVLT)

. Acquisitive Europeans such as

Ericsson

(ERICY)

,

Alcatel

(ALA)

or

Siemens

(SMAWY)

might be interested in acquiring Fore, says analyst Tim Savageaux with the San Francisco I-bank

Volpe Brown Whelan

. Johnson says Fore might entertain offers of 27 a share.

Still, Johnson says, no deal seems imminent: "I was there for four hours on Monday, and my guess is they are not in talks."

Another candidate is PairGain, whose shares traded at 42 1/2 in January 1997. PairGain has grappled with price cuts from rival

Adtran

(ADTN) - Get Report

and defections by customers such as

U S West

(USW)

. But its new asymmetric digital subscriber line systems, which enable local phone companies to deliver data messages to subscribers via plain copper lines, have rebuilt the firm's prospects with phone companies.

"I think it's very attractive," says Savageaux, adding that the company might want to wait a few months for a deal. It just named a new CEO, Michael Pascoe, in early December.

Savageaux speculates that telecom suppliers such as

ADC Telecom

(ADCT) - Get Report

,

ECI Telecom

(ECILF)

or Ericsson might be interested in PairGain. He says the stock is worth 20 a share, or five times last year's revenue.

The march to

Dow

10,000 has taken a rest stop today, and as a result shifted the tide some in the options market.

The key equity put/call ratio was at 0.46 at about 1 p.m. EST, showing that 46 puts had traded for every 100 calls. Pros will typically see 0.47 as a ratio that induces them to begin buying stocks again. When the put/call ratio hits 0.50, it's a screaming buy indicator.