All it takes is a little bit of chatter to get things going, and that's what an article in

USA Today

did for

Qwest

(Q)

.

The paper's report that the company was in takeover talks with German telecom giant

Deutsche Telekom

added some octane to the company's call options this morning. Traders jump on calls if they want to play a takeover, hoping the options' prices will appreciate based on continued speculation that the stock will rise.

Traders in New York said they were seeing "some real size" coming into Qwest's March 55 calls as the stock rose almost 10% to 50 7/8 by midday. The premium on those contracts quickly jumped 15/16 (93.75) to 1 3/16 (118.75) on volume of almost 5000 contracts.

Keith Keenan, a senior options trader at discount brokerage

Wall St. Access

, said volume was strong in the Denver long-distance company, which is expected to complete a $36 billion merger with

U S West

(USW)

later this year.

As the morning progressed the April 50 calls also picked up steam, trading more than 5000 contracts, volume that carried the price up 2 3/4 ($275) to 4 1/2 ($450).

Puts -- that's right -- puts were trading heavily in

3Com

(COMS)

today, even though the stock continues to pick up steam ahead of tomorrow's spinoff of its

Palm

unit.

In early trading today, a wave of small orders hit 3Com's put options as the stock rose as much as 12 to 110 7/8. That price has come in some, and the stock was up 7 5/16 to 105 5/16 at midday.

The traffic this morning was in out-of-the-money puts at the 75, 80 and 85 strike prices, and sent volume over 2000 in most of the March and April series in that range. If put buyers were on the prowl, it would mean there was little speculation that the Palm spinoff would be a bust.

Fear not, Palm Apostles, traders said whatever action was cropping up appeared to be selling, which is a bullish sign for 3Com. Essentially put-sellers take in the high premiums for those put options on the likelihood the contracts will expire worthless.

The stock's continuing strength has put off most options buyers as premiums have been jacked up considerably. But individual investors seemed to be behind this volume, according to two New York options pros.

"This is all trading in small pieces," said Michael Schwartz, the

CIBC World Markets

senior options strategist. "Mathematically, the return is probably higher by selling puts than if you were to buy calls at this point."

The premium on those puts was pretty high. The March 85 puts, for instance, were trading for 3 1/4 ($325) and the option was still almost 20 out of the money by midday.

Wall St. Access trader Keenan said he hasn't seen much options buying on 3Com come across the firm's desk because the options are so "outrageously priced" as a result of the Palm hype. "The premiums are all too high," he said, but added with the spinoff coming, he thinks the "risk is too high to sell these puts."

The danger of selling puts is that the seller is obligated to buy the stock if the option is exercised. That means he could end up paying 85 for a stock that's soon trading at 75 or 80.