U.S. stocks rallied today a head of tomorrow's elections on a variety of takeover bids and merger agreements. The mergers and acquisitions announcements created a bullish equity environment for traders and investors. The S&P 500 is up 1.14%, NASDAQ 100 is up 1.64%, The Dow is up .93% and the 10 year bond rate declined to 4.709%. The CBOE VIX was down .06 to 11.10.

McKesson (MCK) agreed to acquire Per-Se Tech (PSTI), an Atlanta based provider of financial and administrative technology products for hospitals for $28 per share in cash. McKesson's $1.8 billion buyout of PSTI is expected to close in the 1st quarter of 2007. Per-Se Tech option implied volatility collapsed to 20 from 37 on the announcement, according to Track Data.

Four Seasons Hotels (FS) received a $3.7 billion ($82 a share) buyout offer from Isadore Sharp, Cascade Investment (an entity owned by William Gates) and Kingdom Hotels (a trust owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud). Four Seasons currently has 70 hotels in 31 countries. Four Seasons overall option-implied volatility collapsed to 15 from 32, indicating the confidence of this deal being completed.

KOS Pharma (KOSP) signed a definite agreement to be acquired by Abbott Labs (ABT) for $3.7 billion ($78 per share in cash). KOS Pharma develops pharmaceutical products for the treatment of cardiovascular and repository diseases. KOS Pharma option-implied volatility collapsed to 14 from 44 according to Track Data, suggesting the deal will be completed.

Swift Transportation (SWFT) confirmed it received a letter from Jerry Moyes, the largest shareholder, a current director and former chairman/CEO of the company. Moyes proposed to acquire all of SWFT's outstanding stock for $29 a share in cash. Swift Transportation overall option-implied volatility collapsed to 19 from 39 on the confidence the deal will be completed at a price higher than the $29 bid.

OSI Restaurant Partners (OSI) announced a definite agreement to be acquired by a group of investors lead by Bain Capital and company founders for $40. OSI over all option implied volatility collapsed to 14 from 32 on the confidence the deal will be completed.

PLAY, a developer of semiconductors, firmware and software platforms for portable media products, will be acquired Nivida (NVDA) for $13.50 in cash. PLAY option-implied volatility collapsed to 20 from 42 according to Track Data.

Option volume leaders today were Google, Inc. (GOOG), Citigroup, Inc. (C), TXU Corporation (TXU), the Home Depot, Inc. (HD) and Boston Scientific Corp. (BSX).

Options Update is provided by Paul Foster and TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Kos Pharma (KOSP) tops today's modest list of initiations.

• Roth Capital initiated KOS Pharmaceauticals, Inc. (NASDAQ: KOSP) with a Buy and $57 target. The firm is positive on Kos' position in the large cardiovascular market.

OTHER INITIATIONS:

• Lazard started Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN) with a Buy and $22 target. They expect Aladdin's leadership position in the DRM market to continue.
• Soleil initiated Shoe Carnival, Inc. (NASDAQ: SCVL) with a Buy and $34 target. They believe Shoe is well positioned to make secular earnings growth of at least 20%.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).