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Semiconductor Options Stage a Strong Rally

The Philadelphia Semiconductor Index hit an all-time intraday high today.

Amid a rumor mill that's heaving and out of breath, options investors bellied up to Wall Street's betting table Thursday to poke around the chips -- the options, that is. The

Philadelphia Semiconductor Index

, or SOX, recorded an intraday high Thursday as a result.

"There was a lot of easy money made in the past five years in the options market, just deals, deals and more deals," said Michelle Hiller Skupp with

Miller Tabak

in New York. "But now the froth is out of the market. It's much harder to make money."

So it was back to the building blocks like chip and chip-equipment companies. The SOX started its rally Tuesday and then hit an all-time intraday high Thursday of 543.6. September 550 calls on the SOX were up 1 3/4 ($175) to 15 ($1,500), and the September 560 calls were up 1 1/8 ($112.50) to 10 1/8 ($1,12.50).



continued to witness call-buying, even in out-of-the-money strikes ahead of what's viewed as the company's D-Day at an upcoming conference. (

interviewed Rambus' CEO earlier this week.) Randy Emer with


, Rambus' option market maker at the

Chicago Board Options Exchange

, pointed out that up to this point, much of the order flow in the options has been evenly divided between puts and calls, indicating that "perhaps a lot of the news was being accounted for in the stock price."

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Rambus licenses and markets chip-to-chip interface technology for use in consumer electronics, computer systems and other electronic systems.

Rambus stock was up 7 3/16 to 103 7/8; the September 105 calls were up 2 3/4 ($275) to 7 ($700) and the September 110 calls up 2 1/8 ($212.50) to 5 1/8 ($512.50) on thin volume.

Elsewhere in technology options trading,



shares staged a huge turnaround in recent days, and though the stock was down slightly Thursday, the options on the telecommunications software company held up strongly. Aware technology enables broadband services over existing telephone networks.

Aware shares were down 1/4 to 36 3/16, but the September 40 calls were up 1/4 ($250) to 2 5/8 ($262.50) and the 45 calls up 3/4 ($75) to 1 1/16 ($106.25).

Lenny Schuster, a money manager at

Gemina Capital

who owns Aware Shares, said that the stock earlier this year "basically fell out of bed" after what proved to be an unwarranted panic over the company's chipset business with



. Schuster contends that "broadband is such a growing market that there is room for both

it and cable, though cable has the lead."



is a licensee of Aware, he said.

Option investors also played a hand in



, a silicon software- and chipmaker, with heavy trading in the September 130 puts. The stock bucked the sector and dipped 2 3/8 to 131 1/4, while the 130 puts gained 5/8 ($62.50) to 6 3/8 ($637.50) on volume of more than 1,200 contracts and open interest of 480.

One New York-based trader said he was seeing "unbelievable activity" in



long-dated call contracts from institutional buyers like

Chicago Corp.

"The stock's been running over the last few days, and we're hearing floor brokers have just swept up everything they can," he said. With the stock up 6 1/16 to 196 on Thursday, the 2000 January 200 LEAPS (Long-term Equity Anticipation Securities) spiked 4 5/8 ($462.50) to 27 1/4 ($2,725) on volume of 194 contracts.


Cowen & Co.

was said to be shopping around the Chicago trading floor crowd Thursday for takers on 5,000 contracts in

BP Amoco


April 110 puts and calls, a strategy known as a "straddle" or, even better, a "reverse conversion." In a reverse conversion, an investor is generally short stock, long puts and short calls. "The fact that they're shopping these calls could mean they're trying to unwind a short position," a Chicago trader said. The oil giant's stock, meanwhile, was down 4 3/16 to 110 1/8.