The major networking outfits are seeing plenty of action in the options market today as many investors are anteing up ahead of


(CSCO) - Get Report

earnings announcement. Cisco, the poster child for technology stocks, is typically one of the most actively traded options on the major exchanges. Today, however, volume is soaring even higher as bullish investors continue to make speculative bets on the stock.

Earlier today,

Morgan Stanley

upgraded the stock to market outperform from neutral, citing increased confidence in its enterprise business and "better-than-expected data points" on its switching equipment. Analyst Christopher Stix believes the stock will recover about six months before the fundamentals.

It appears that even some investors who were burned by the stock over the last year are looking to get back in. But rather than buying 100 shares of the stock, which would cost roughly $2,000, investors can buy call options at a premium of $1.30, or $130 per contract. A call option gives the holder the right but not the obligation to buy a stock at a fixed price by a certain date, known as expiration. Options enable the investor to speculate on the stock's direction without having to lay out the full amount it would cost to purchase the stock.

Investors were most notably chasing the at-the-money May 20 calls, which traded over 31,000 contracts on an open interest of 140,642. The premium on those calls climbed to $1.45 on the

Chicago Board Options Exchange

. Typically, prices for options on a company's stock rise ahead of its earnings. Also active were the May 17 1/2 calls and the May 22 1/2 calls. Put activity on the May 20 calls was fairly high as well trading over 12,000 contracts on an open interest of 15,230. Premiums on the May 20 puts were most recently listed at $1.25.

With the number of Cisco calls outnumbering the puts almost two to one, it appears that investors believe the stock will go up. According to David Schultz of

Summit Capital Holdings

, one strategy investors are applying to the Cisco options is using "synthetic stock." A synthetic stock is created when an investor simultaneously purchases a call option and sells a put option on the same stock. The end result is that the synthetic stock has the same value, in terms of capital gain potential, as the underlying stock itself. Provided the premiums on the options are the same, they cancel each other out so the transaction fees are a wash. Schultz characterizes much of the trading activity on Cisco options are institutional plays, with many individuals remaining on the sidelines.

Cisco shares recently traded up a $1.19, or 6.2%, to $20.44.

As for one of its competitors,


(CIEN) - Get Report

also was seeing some interest in the options market. Ciena, fresh off a two-year

$150 million deal with



announced today, experienced increased volume on the out-of-the-money May 55 puts, which traded about 4,000 contracts on an open interest of 5,724. Both the May 60 calls and May 60 puts were active as well. The premiums on those options were listed at $4.60 and $4.70, respectively. The activity on Ciena options also could be part of a synthetic stock strategy.

Shares of Ciena recently were up $5.97, or 11% to $61.25.