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Apart from some hedging against Internet stocks and the odd trading opportunity, such as

Time Warner


, the options world mostly held its breath Tuesday ahead of the promised interest-rate news.


Standard & Poor's 100

index, or OEX, options traded fairly sleepily ahead of a potential cut in interest rates. The index was up 4.3 to 714.2 at midday.

The at-the-money puts and calls turned up a bias toward a rally: September 715 calls were up 2 1/4 ($225) to 15 1/2 ($1,550), while the September 715 puts were down 1 3/4 ($175) to 12 1/2 ($1,250), both in fairly thin volume.

One Wall Street giant threw the television out the window and the stock price went with it. In a research bulletin issued Tuesday morning,

Merrill Lynch

analysts lowered their earnings estimates for Time Warner's music and

WB Network

divisions, citing declining U.S. market share and weakness in key international markets. The stock sickened to 60 before recovering just slightly to 61 9/16, down 4 5/8.

Not everyone was flipping channels. While put volume was heavy in the downgrade's wake, some of that traffic was put-selling, traders said, an indication some pros think Time Warner may be putting in a bottom. They were willing to sell a good portion of the 3,500 put option contracts at the September 60 and December 55 strikes, according to a source at the

Philadelphia Stock Exchange



Morgan Stanley Dean Witter

was a big seller today, that's the main name we're seeing," said a source at the exchange who asked not to be identified.

Put-selling is generally regarded as bullish because it obligates the seller to buy the shares at a specific price. Put sellers usually write positions at a level at which they think the stock will bottom.

If traders believe the selloff in Time Warner stock may be overdone, they're willing to place bets that fairly big put positions sold to investors will expire worthless once the stock recovers. Or they may be willing to own it at 55 or 60.

Coulter 45

Coulter Pharmaceuticals


saw its implied volatility, an important factor in pricing options, skyrocket to "well over 100," according to one trader, compared to historical volatility of 66.

Coulter's stock price was down, but prices of put options were down as well. Call prices, meanwhile, were flat or higher. Coulter shares slipped 3/8 to 30 1/2, while the September 30 puts dropped 1/2 ($50) to 3 1/2 ($350); September 30 calls inched up 1/8 ($12.50) to 3 1/4 ($325) in thin trading.

Coulter develops cancer drugs based on two platform technologies, and is waiting for the

Food & Drug Administration

to accept its application for the potential blockbuster Bexxar.


profiled some of the jerky trading in the stock that's resulted from the market's anticipation of this news.

"Coulter will get a milestone payment when the application is accepted," said one Philadelphia-based trader. "It's an event in that respect, but in no way is it an approval."

Listing to One Side

Coda to the multiple-listing

options war that ensued Monday: Specialist firm

Bear Hunter LLC

was chosen by the

American Stock Exchange

as options specialist for




Bear Hunter is affiliated with

Kalb Voorhis

, a well-known market maker in options such as







Morgan Stanley Dean Witter


and the Nasdaq 100, or QQQ, index options.