Ahead of


(CSCO) - Get Report

earnings announcement Tuesday,

options investors are making speculative bets on the networking giant and some of its competitors.

After taking a $3 billion

restructuring charge in March to write off inventory, the networking giant saw its share price drop a bit before making a comeback in the past 10 days. In addition to the charge, Cisco also issued a profit warning for its fiscal third quarter, which ended last month, driving analysts' estimates downward. Despite the earnings shortfall and the enormous size of the company's inventory writedown, the market seems to have shrugged off the bad news.

Some traders are saying that Cisco's earnings numbers themselves won't be the "focal point" Tuesday because they're unlikely to be a surprise. Paul Foster, of


, agrees, saying that investors will pay more attention to CEO John Chambers' words on the conference call after the release. He also says that because Cisco's profit results are likely to be in line with analysts' estimates, volatility in Cisco options is moving lower.

In today's trading on the major exchanges, Cisco was leading the charge with more than 9 million contracts traded by midafternoon. The June 20

calls were among the most active as more than 21,000 contracts were traded on open interest of 18,884. Open interest refers to the number of contracts that have yet to be offset or fulfilled delivery. The premium, or cost, of the contract on the June 20 calls, is listed at $2.00 ($200 per 100) on the

Chicago Board Options Exchange

. As for

put activity, which was decidedly lower, the May 17 1/2 puts traded over 7,000 contracts on an open interest of 19,784. The premium on these puts was listed at 65 cents ($65 per 100) on the CBOE. According to Foster, the Cisco activity involves "sellers of June volatility." Essentially, many investors are selling calls of Cisco betting that volatility will ease in June and the subsequent months.

Cisco shares ended the day down 39 cents to $19.25.

Elsewhere, options in

Barrett Resources


, a supplier of natural gas to the Midwest, were active due to the bidding war waged by

Royal Dutch/Shell




(WMB) - Get Report

. Williams outbid Shell for the right to acquire Barrett in deal worth $2.5 billion in cash and stock. Under the deal, Williams is offering $73 a share in cash for 50% of Barrett's outstanding common stock. Williams will then exchange 1.767 shares of its common stock for each of the remaining Barrett shares. Williams will also inherit Barrett's $300 million debt. News surrounding the merger sparked large call volume on the CBOE.

The Barrett June 70 calls traded about 4,100 contracts on an open interest of 3,280. The September 65 calls traded more than 12,000 contracts on an open interest of 13,467, with most of them trading on the Chicago exchange. The December 65 calls traded 8,574 contracts on an open interest of 7,662.

Shares of Barrett closed up $2.85, or 4.2%, to $70.15 Monday.