Ahead of a slew of earnings this week, options activity was hopping on the bandwagon of numbers that have already come out of Corporate America.

Most of the U.S. banks are reporting this week, as well as technology companies such as

Microsoft

(MSFT) - Get Report

,

Advanced Micro Devices

(AMD) - Get Report

and

Xilinx

(XLNX) - Get Report

.

Microsoft's earnings are due out

Tuesday, and rampant speculation showed in the software giant's options, particularly the January 105 and January 115 calls, as investors were playing for strong numbers.

A call option gives the buyer the right to buy the shares of a company at a certain price by a specific date and is often used as a proxy by those who would otherwise buy the underlying stock.

With Microsoft creeping up 2 11/16 to 114 15/16 by midday, the January 115 calls give the holder the right to buy the stock at that price even if it pops after the earnings report Tuesday. More than 4,300 of the January 115s traded by midday, volume that pushed the price up 7/8 ($87.50) to 3 3/8 ($337.50). (These options, by the way, expire at the end of this week, as do all January-dated equity options.)

And while most of the January Microsoft options players may not even hold these options until tomorrow, some investors were bidding up call options out into February on the hope that the stock will continue to rally.

In particular, the February 120 calls have gained 7/8 ($87.50) to 4 7/8 ($487.50). February calls would allow the holder of those options to buy the stock at 120 until the option expired in February. That could work out to be a bargain if the stock takes off.

"A lot of high-volume situations this week were related to earnings, and even

Warner-Lambert

(WLA)

, which continues to be buoyed by merger talks with

Pfizer

(PFE) - Get Report

, is moving on earnings due out soon as well," said Larry McMillan of

McMillan Analysis

in New Jersey.

Lucent

(LU)

options were again active Tuesday after

speculation last week that regulators were investigating the company's accounting practices.

Among the most sought-after were the in-the-money January 55 puts, trading for roughly 3 1/4 ($325), up 1/4 ($25) per contract on the

American Stock Exchange

. Lucent shares were under pressure this morning, down 2 3/8 to 51, and the busy put-buying showed there was little optimism around the once-beloved name.

Lucent's earnings are due out as well

this week, and the activity appears to be favoring the put side.

Oftentimes, option activity will hint at news to come, using

Advanced Micro Devices

(AMD) - Get Report

as an illustration.

AMD is due to report this week, and although the stock price was down 5/8 to 39 3/4 Tuesday, most of the call options were being bid up slightly on option trading floors. That could indicate that investors were willing to pay up for the call options on the expectation that earnings are due out and the stock may pop on the news.

AMD's January 45 calls were up 1/8 ($12.50) to 1 1/8 ($112.50), and the January 50 calls were up 3/16 ($18.75) to 5/16 ($31.25).