PREMIUMS in futures were slashed in afternoon selling as bulls, hoping for a rally next week, lost their bottle. December futures fell 60 points to 9,930 after making two bids intra-day to make it through 10,000. On Tuesday the contract was unable to hold above 10,000. At the close yesterday there was a 10-point premium over the cash, compared with more than 60 points previously. In early trading the contract pushed through 10,000 to make a high of the day of 10,035. By lunch, however, the contract slipped below this key level. In early afternoon the future edged back through 10,000, but there was no sentiment keeping it there. The contract closed on the low of the day. January futures also were hit by a 50-point decline to 9,990, a premium over the cash of about 70 points. March 1996 futures were at 10,100, up 120 points on the day and a premium over the cash of 180 points. These investors have gone long in anticipation of a Lunar New Year rally in January and February. In June 1996 the future was up 150 points to 10,135. Volume overall was modest at 12,898 contracts. In December, 12,280 contracts changed hands, in January there were 518 traded and in March, along with June next year, there were 50 contracts traded in each month. In index options, activity in December focused near-the-money. In volume terms, however, 10,000 calls saw the largest number of lots traded. The 9,400 and 9,600 calls also were busy. In the puts, the 10,000 strike also was active. In January, the calls were relatively lightly traded while there were 948 lots changing hands in the 9,000 put strike. The 9,400 strike saw more than 100 lots traded. Much further out, there were 200 lots traded in the June 1996 10,600 call. Investors remain fairly cautious ahead of the Federal Open Market Committee meeting on December 19. The higher than expect producer price index figures for November took some investors off-guard and triggered a ripple of pessimism in the market regarding the prospect of a US rate cut. A rate cut will see the cash index go through 10,000. The failure of a rate cut to come out of the meeting will see the index slide back to about 9,400.