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While the stock market's performance Friday looks as attractive as the prospect of guzzling a gallon of chunky, sour milk, some options market sentiment gauges aren't giving off even a whiff of fear.

Considering how awful stocks have looked lately, including Friday, sentiment indicators used by option and stock market pros aren't reflecting a high degree of discomfort or worry among investors, which to contrarian traders is bad news. The worse the sentiment on stocks, the closer the market is to turning a corner and rallying, or so contrarian theory goes.

One market maker on the

Pacific Exchange

said "everything's just getting whacked." He noted that stocks didn't look that bad even after the release of Friday morning's

employment report; however, shortly after the session began, the sellers hit the market rudely, knocking major market barometers into the red. He added that options trading was light overall.

Options market sentiment indicators that traders use to gauge pessimism or fear in the market aren't indicating much of anything Friday on another big down day in the market. The

Chicago Board Options Exchange

equity put/call ratio has actually dropped to 0.55 Friday from Thursday's closing level of 0.70. The overall option market equity put/call ratio was at 0.56.

Also, the

CBOE Volatility Index

, which some watch as a gauge of the market's anxiety level, was up Friday, but not as much as many would like. The VIX rises when put option buying increases on options on the

S&P 100

, or OEX. A put option gives the purchaser the right, but not the obligation, to sell a security for a specified price at a certain time.

For contrarians, low readings on the VIX are bearish, while high readings are bullish. During the April selloff, the VIX spiked as high as 41.53. At midday, the VIX was at 25.00, up 5.80%.

Some options pros look at the VIX with a wary eye, however. And with a good number of options traders, the VIX has fallen out of favor. This is in part because volume in OEX options has declined significantly over the past few years, suggesting to many that the VIX may not be as reliable a sentiment indicator as it used to be.

Some consistently bullish action in



options is starting to make itself known to traders, leaving some to wonder what's going on with the oil giant.

Heavy action in Texaco options isn't anything new. Interest in options on the stock in the past has been juiced up in part by


speculation, but no deal has ever emerged.

If Texaco as a takeover target is again in the rumor mill, keep in mind that one potential acquirer that's been mentioned before is

Royal Dutch

( RD).

The Skupp-Seidman options team at

Miller Tabak

has pointed out recently in reports to clients some notable call buying in Texaco options, action that has helped land Texaco on the duo's "positive watchlist."

A call option is a type of option that gives the purchaser the right, but not the obligation, to buy a security for a specified price at a certain time, and is basically a bet the stock will go up.

Texaco shares gained 31 cents to $52.63. Call option volume was dominating the action in Texaco options Friday; however, the volume overall wasn't dramatic. On the

American Stock Exchange

, 559 of the October 55 calls changed hands. The calls were unchanged at 1 1/16 ($106.25).

Some other series of Texaco options were active also, but it appeared the bulk of that volume stemmed from traders and investors putting on spread trades.