If there's one thing that gooses options, it's volatility.

And there's plenty of that to go around these days, what with yesterday's bloodbath among Internet issues and on the technology-heavy



There were lots of explanations as to why.

"These Internet stocks are the bailiwick of daytraders. And they simply don't have the money to take these positions home at night, so they sell," said Paul Foster of

1010 WallStreet.com

. "Either that or the trading desks sell them out," perpetuating the selloff.

"Why did people decide to take money off the table? They're still moving it into cyclicals," said Scott Fullman, chief options strategist at

Swiss American Securities

, part of

Credit Suisse Group

. Calls in drug stocks like

Eli Lilly

(LLY) - Get Report

, for example, were among the most active on Tuesday.

"People realized that the Internet run is over for a while, so let's go into something that hasn't moved. They're not buying stuff that has led the market to these highs. With

America Online


at 167 and higher

in recent weeks, you'd have to be crazy to leave all that money on the table," he said. "That money that's come off, though, isn't leaving the market. Meanwhile, no new money seems to be coming in, yet."

To account for investors' willies about wild stock price swings, options traders factor in higher implied volatility -- a measure of the amount by which the underlying security is expected to fluctuate in a given period of time -- into prices.

Speaking of which, AOL's implied volatility was 77 a week ago. As of Monday night, it was 91.


(AMZN) - Get Report

implied volatility hit 42 last week but was up to 46 late Monday, and


(DELL) - Get Report

rose from 65 to 69 this week.


(MSFT) - Get Report

implied volatility is also higher, up from 46 last week to 52 this week, but that's partly because the software giant is set to release earnings after the close of today's trading session.

In the short term, "we'd be buying calls on Microsoft, given the market's instinct for always buying the stock on dips," Foster of 1010 WallStreet said.

But further out, Foster's bearish on Mister Softee and the stock price. "The language of Bill Gates and others there have changed. They're talking about reorganization, about


as a competitor."

Saville Systems


hit the market's rumored takeout menu.

The stock has been moving up since Thursday, and it gained 1 1/4 to 12 today.

Saville, an Irish company, provides customer billing to telecommunications and energy concerns, using proprietary software. Volume in May 12 1/2 calls shot up to 1,208 contracts, compared with open interest of 873. The price of May 12 1/2 calls gained 1/4 ($25) to 1 1/2 ($150).

Does it matter that the stock's been downgraded by a rash of Wall Street firms over the past month and a half and that a major customer canceled a contract? Takeout always leaves a sweet taste in the market's mouth -- even if it comes wrapped in a rumor and poor fundamentals.

"The stock is so cheap right now, it's no bother to carry it on the books," just in case the rumor turns out to be true, said one trader.