Talk about spoiling the mood.

The

Viagra

-inspired volatility that had taken

Pfizer

(PFE) - Get Report

shares to new highs during the past month is slowly draining out of the market. After the impotence drug was launched to an eager customer base, investors piled into the company's shares.

But now they're asking, what has Viagra done for me lately? Essentially, the short-term volatility options traders feed on is dissipating and traders may actually be closing out some of speculative call positions as prices fall. The absence of another "event" situation such as a product launch or another breakthrough treatment, in addition to published reports today that insurance companies were going to impose strict reimbursement policies on Viagra use, is keeping a lid on the optimism and volatility that seemed boundless last week.

Traders in the Pfizer options pit at the

American Stock Exchange

said that once the public call buying slowed down, professionals started taking profits from some May call positions. Volume on the May 115 calls reached 3,100 by midday while more than 4,977 of the 120 calls changed hands.

Some of that activity was also related to buy-write strategies as holders of the underlying shares were selling the calls to cut the purchase price of the shares and have an exit point if the stock were to hit that 115 or 120 level. Pfizer's shares were down 1 3/16 today to 112 3/16 by about 1:35 p.m. EDT.

"This news might be a little tough to swallow, and people have gotten a pop," said

Everen Securities

options trader Bob McBey. "These positions were probably pure speculation and now they're being closed out."

But as the May positions were losing some value, the volatility in the Pfizer's June options was picking up, traders said today, as some investors were playing for reports on Viagra's future prescription orders.

* * * * *

Traders also are watching

Sports Authority

(TSA)

today as the oft-resurrected takeover chatter surrounding the company popped up again. The company's shares were trading up 1 7/16 to 17 1/4 as the Street was expecting some kind of news out of the company.

Sports Authority is presenting at a

Lehman Brothers

conference next week, so some of the good feeling may be coming from the anticipation of something positive emerging there. Those expectations, in addition to takeover rumors crawling across options desks today, have spurred volume in its May 17 1/2 calls to hit 550 by midday.

Some traders speculated this morning that a takeover price for Sports Authority could be in the $23 range, according to one pro at a major options firm, but the market has "seen this level of aggression" surrounding the stock before with no major news resulting.

* * * * *

For the 70% of investors who lose money in options, here's a little story to warm your heart, courtesy of a few floor traders at the

Pacific Exchange

.

Back in February, when

First Union

(FTU)

was trading at about 50, a investor took a large position in the 1999 January 40 calls, buying about 7,000 contracts over the course of two days for between 12 5/8 ($1,262.50) and 13 5/8 ($1,362.50).

Were the high prices of those options worth it?

Yep. Yesterday, with the big bank's shares at just over 60, the investor sold the calls back for 21 ($2,150) for a profit in the $5 million range, P-Coast's First Union market maker James Burleson said yesterday.

The trading crowd, who had bought First Union stock to hedge the position, handled the volume easily and also sold about 700,000 shares yesterday, so essentially "everyone went home happy," Burleson said.