Option activity was on the rise Thursday and volatility was notably higher as traders continued to digest the latest earnings and forecasts from corporate America.

The CBOE Market Volatility Index (VIX), which is based on the implied volatility of the S&P 500 options and is used as a gauge for fear in the market, was recently up 2.3% to 14.93. The CBOE Nasdaq Volatility Index, a measure of the implied volatility of the Nasdaq 100, was higher by 5.1% to 16.69.

The iShares Russell 2000 Index ( IWM) had put buyers as the ETF traded lower. The November 62's have traded more than 25,600 times. The buyer here is expecting the ETF to trade below $62 a share by the expiration next month, a short-term bearish outlook.

The November 62.50 puts have traded 2,500 times, and the November 64 puts changed hands 5,400 times. The ETF was down 79 cents, or 1.2%, to $62.73.

Lucent ( LU) options were active a day after the company offered a forecast investors didn't like. All of the calls were trading lower as the stock slid. The November 3 calls have traded 7,000 times and were offered at 5 cents, but there was no bid.

Here, investors aren't giving Lucent's stock much of a chance to trade above $3 by the next expiration. The January 2.50 puts have traded 8,300 contracts, and the April 3 puts were exchanged 8,900 times. The January 2007 puts with a 2.50 strike had 8,100 contracts swapped. The January 2007 calls striking at 5 traded 10,800 contracts and were down 5 cents. Shares of Lucent were losing 18 cents, or 6.1%, to $2.75.

The November 25 calls on Microsoft ( MSFT) traded 12,000 times ahead of its earnings release, scheduled for after the close. The price of the 25 calls was unchanged at 75 cents, suggesting traders are taking a wait-and-see approach. The January 27.50 calls have traded 13,000 contracts. The stock was up 10 cents to $25.21.

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