It's 11:30 Friday morning and the phone rings. The voice on the other end is familiar. "It's Foster," the voice says. "I just wanted to tell you about

Pioneer Hi-Bred

(PHB) - Get Report

. I wrote about it yesterday, saw the volatility action higher. The stock just was halted. It could be a deal." By Monday,

DuPont

(DD) - Get Report

had agreed to buy the 80% of Hi-Bred it didn't already own.

From his post in a corner of a trading firm's Chicago office,

1010 WallStreet's

Paul Foster has dragged the gritty rumor mill that is the options market into Internet daylight and has posted an impressive record of spotting deals. Among the deals detected by Foster and published on his Web site -- owned by Chicago options firm

Mercury Trading

-- this year include

Aegon's

(AEG) - Get Report

bid for

Transamerica

(TA) - Get Report

,

Allied Waste's

(AW)

offer to buy

Browning-Ferris

(BFI)

and the DuPont bid.

The Gekko-esque image that accompanies tales of savvy M&A players doesn't exactly hold true in this corner of the market. But investors have done well if they've followed such pros as Foster, a former vendor at Minneapolis'

Target Center

; Lillian Seidman and Michele Skupp, two fast-talking, high-octane New York traders; and

Salomon Smith Barney's

Leon Gross, a bulge-bracket strategist with a penchant for numbers.

The frenetic M&A pace of 1999 has become lucrative for the ears trained to discern a deal pattern from the willy-nilly chatter of the options market. It ain't, however, easy.

"What we do is labor-intensive. Most people just don't have the skill to do it," says Seidman, who works for

Miller Tabak Hirsch

, a small brokerage catering to institutional business. "We've been in this business for years, and you learn how things trade."

At Miller Tabak, Seidman and partner Skupp follow options traffic like

Giuliani

flatfoots at the end of the month and have racked up an impressive record of calling deals for several years. Their recent catches include

Sundstrand

(SNS)

falling into the arms of

United Technologies

(UTX) - Get Report

,

Sonat's

(SNT)

deal to join

El Paso Energy

(EPG)

, and Pioneer Hi-Bred.

At the top of the heap, according to traders, is Solly's Gross. "Nobody knows more than Leon, period. He is as fine a talent as exists in options," says one well-traveled Chicago options veteran. "There are others who are very smart and well trained, but they are not scientists like Leon."

If Gross sounds like a scientist, it could be, well, because he is. In addition to getting a master's degree in philosophy from the

University of Chicago

, he has published papers on biophysics and molecular modeling. Unlike Skupp, he doesn't greet a caller (at least not this one) with, "Hi, sweetheart," before rattling off what's hot and why. He often speaks in standard deviations and means and averages but can boil information down to its essentials.

"If the options volume is unusually high and the stock volume is normal, then maybe someone is taking a shot," he says. He runs a screen that picks up on unusual option volume every half-hour. In the options market's old days, trading firms would run similar screens more to ensure they didn't sell options into a takeover than to get involved in one.

Though Gross' stats are deep, Solly's institutional client base uses options for a variety of reasons, leaving Gross to tend to many tasks beyond takeover-watching. Unlike others, he won't just start calling clients; he opts to pass along the report to Solly's trading desk for it to chase.

One of his other key indicators is when a company's out-of-the-money calls show high volatility, which results in higher prices, and the at-the-money calls show low volatility.

"That means people aren't paying attention to what they're paying for an option," he explains.

It's tough to imagine the analytical Gross throwing a Back-to-Disco holiday party for clients at New York's

Cheetah Lounge

like Seidman and Skupp did last year.

Mistaking the pair's fun-loving demeanors for anything less than killer instinct would be a mistake. Seidman made her bones trading on the

American Stock Exchange

floor while Skupp trained on Solly's derivatives desk.

"When you work on the floor, you learn supply and demand, how things trade, who's smart money and who's not," Seidman says.

They have another advantage: their clients, known for being among the largest and most savvy investors in the nation. "We can hear the options noise that we think is interesting, and sometimes the clients know the fundamentals of a stock better than we do," Seidman says.

1010 WallStreet's Foster says he doesn't even know who his clients are or if they trade on the information included in his intraday Internet updates. In addition to market coverage, Foster writes using the third person to criticize luminaries ranging from

Al Dunlap

to

Madonna

to

Charles Barkley

(who Foster claims filched popcorn from him during a

Minnesota Timberwolves

game a few years back) and to recount often treacherous early-morning bike rides through Chicago.

Most of the time, however, he focuses on the market. One passage ended: "

Iomega

(IOM)

sees losses larger than expected. Motley Fools, how do you feel about your loser now? Clueless."

Foster may work for flamboyant Chicago trader Jon Najarian, but his refreshing Web bravado belies an unassuming and frequently self-deprecating character that emerges in conversation.

He'll remind you that he's not an M.B.A. -- he has a B.A. from the

University of St. Thomas

-- nor is he what he considers overpaid. He doesn't do summers in the Hamptons, but he has done his time clerking and trading on the various Chicago floors.

He depends less on the floor or the Street for his ideas than other pros. "I'm a goofball. I ride my bike to work. I spend the weekend in the library reading all kinds of newspapers and magazines. I'm just looking for facts, themes and ideas. I'm an observer," he says.

That's not to say that reading options activity always leads to big hits. Foster has been watching and waiting for

PaineWebber

(PWJ)

to get acquired, and he's predicted that Steve Jobs will sell

Pixar

(PIXR)

to

Disney

(DIS) - Get Report

and eventually take Disney chief Michael Eisner's job. That hasn't stopped every major news organization from being hooked on his insights, which now cost $995 a year.

Seidman and Skupp will chase the occasional ghost, too. Seidman agonized over

Fruit of the Loom

(FTL)

, and for a while expected that it would get taken out. It hasn't. "We just bit the bullet on that one," she says.

They also have learned to pick their spots, even staying away from hot tech sectors. "We like things that are undercovered," Seidman says.

Yeah, like little-known

Montana Power

(MTP) - Get Report

, a company in which they recently saw bullish call action. Nothing's happened yet, but the odds are that if there is gold in them thar hills, someone tracking the options is already digging.