Happiness, puppy dogs and rainbows -- and jobs data that showed the economy might be cooling off of its own accord -- left options investors absolutely giddy as they got into some old favorites Friday.

With the climbing

Dow

and

Nasdaq

providing the backdrop, option players renewed their bullish faith in such companies as

America Online

(AOL)

, which has been in the doghouse since it revealed its plans to buy

Time Warner

(TWX)

.

Of course, someone in the contrarian circles of the options market had to provide a dark cloud to all this sunshine. "There has been an incredible amount of call-buying in the past few weeks," said Jerry Hegarty of

Cape Market Research

. "And I think some of these stocks are going to get hit before too long."

Historically, when the options market sees such a level of call-buying as it's seeing now, there's a downturn before the next expiration, Hegarty explained, adding this barometer is accurate "about 90% of the time."

But by midday, AOL was up -- very slightly -- 5/16 to 56 13/16, but that was enough to send investors back into the March 60 calls, which traded 15,800 contracts. The just-out-of-the-money strike price of the calls and the fact that it expires in just two weeks mean investors are expecting more upside in the stock.

Other usual faves,

Microsoft

(MSFT) - Get Report

and

IBM

(IBM) - Get Report

, and merger target of the moment

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Qwest Communications

(Q)

were leading the options action today. (Qwest's activity also sparked spillover interest in the call options of other telecom companies such as

Global Crossing

(GBLX)

and

Talk.com

(TALK)

.)

Rod Jamieson, options strategist at

First Union Securities

, said he's noticed the good feelings surrounding the markets today, but noted most of the action was on the stock side, not the options side. "With the market up so much, we're still a little quiet -- probably because it's Friday," Jamieson offered.

Some options players were taking advantage of the market surge today to roll out longer call plays and pocket some profits. For example, someone swapped 2,500 contracts of April 55 calls, which were trading for 15 3/4, or $1,575 per contract, for the April 70 calls, which were trading for $700 per contract, in

Peregrine Systems

(PRGN)

.

The move allowed the investor to take about $2 million off the table while staying long calls that will likely be in the money within the next week if the current upward spike in the stock continues. Peregrine, a San Diego software company, has been on a run lately, almost doubling since the end of last year. Peregrine's stock hit a new intraday high Wednesday of 76 1/8, and was up today to 65 1/4, up 3/32.

Even companies that are distant cousins to technology were seeing action.

Best Buy

(BBY) - Get Report

, the electronics retail chain, was symbolic of the good feelings effusing from Wall Street today.

Best Buy helped things along Thursday by announcing that its fiscal fourth-quarter same-store sales rose 11%, mostly due to the purchase of digital products. Best Buy's stock was up to 61 1/2, climbing 4 7/16.

The strength brought buyers into its April 60 calls, which traded more than 1,000 contracts against open interest of just 431, indicating new money at work. The calls went out at 6 1/4, ($675), up 2 1/4 ($225), meaning the investor was envisioning a likely 10% surge in the stock by next month.

Meantime, investors dumped 3,320 contracts of the company's March 50 puts, which had fallen in price to 1/4, or $25 per contract, a drop of about 60% since their last trade.