If the final word on

Warner-Lambert's

(WLA)

diabetes drug

Rezulin is coming from the

Food and Drug Administration

Friday, investors were looking today to speculate on what the agency's lean might be.

Nowhere was that speculation more evident than in the company's options trading, as the optimists and the doomsayers squared off. Halfway through the day, neither side was making serious inroads despite weakness that had driven Warner-Lambert's shares down 2 1/8 to 68 9/16.

On Friday, an FDA advisory panel is expected to release its findings on the diabetes drug and how many deaths related to its use occurred since its 1997 launch. This morning, Great Britain's drug regulatory agency rejected an application from

Glaxo Wellcome

(GLX)

to reintroduce troglitazone, the chemical name for Rezulin. Glaxo owns the European rights to the drug.

Call volume was unusually heavy in the now out-of-the-money April 70 and 75 strikes, reaching 3,800 and 2,600, respectively. That trading, however, surely was made up of some liquidation of longs playing in the options.

The put volume, as many expected, was heavy. The in-the-money April 70 and 75 puts each traded more than 2,000 contracts, volume that jacked up the premium in both. The premium on the April 70 puts rose 5/8 ($62.50) to 1 5/8 ($162). The 75s responded to the pressure much the same way, trading up 1 5/8 ($162.50) to 6 5/8 ($652.50).

From the options pit at the

American Stock Exchange

, the trading looked like it was seeking some more insight on which way to go, according to one floor denizen. "It seems like the public is buying both the puts and the calls. It just seems like a lot of speculation either way," the trader said. "There's going to be big news on Friday, so people are trying to figure out whether it will be positive or negative."

The trader said the implied volatility level -- the gauge of how much the market expects a stock to move in either direction -- had risen to 40 or 45 on some Warner-Lambert options from levels of about 37 last week.

Fore Systems

(FORE)

is the takeover stock that won't die.

Rumors that it might be taken over soon, which were revived about two weeks ago, have added some juice to the network equipment company's call options. Today, for instance, the stock was up 1 11/16 to 18 11/16.

That stock movement was enough to generate action in the April 17 1/2 calls, which traded more than 2,200 contracts as premium rose 1/2 ($50) to 2 3/4 ($275). The April 20 call volume hit 1,700.

Staff reporter Erin Arvedlund contributed to this story.