Option volume was on the light side, and volatility edged slightly higher Monday.

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 1% to 14.39.

The CBOE Nasdaq Volatility Index, a measure of the implied volatility of the Nasdaq 100, was rising 0.5% to 17.60.

Microsoft's ( MSFT) November 25 calls traded more than 22,000 times and were higher by 10 cents at 80 cents. The break-even point for the trade would be $25.80, before any associated commissions.

Meanwhile, Microsoft's November 25 puts have traded 2,100 contracts and were down 5 cents. Microsoft shares were up 16 cents, or 0.6%, to $25.69.

The Industrial Select Sector Index ( XLI) had the December 28 puts trade 20,000 contracts. Option activity in this ETF is usually very limited. The open interest for the strike was 20,073 contracts, meaning a trader was probably closing a position. The ETF was up 9 cents to $29.24.

Cisco ( CSCO) had the November 17.50 calls trade more than 14,500 times. A trader here bought the calls hoping the shares will climb ahead of Cisco's earnings Nov. 9.

With the stock recently trading at $17.46, the calls are slightly out of the money. The November 17.50 puts have traded 2,300 contracts and were down 15 cents. Shares of Cisco were up 32 cents, or 1.9%, to $17.46.

About 8,300 of Merck's ( MRK) December 30 calls were exchanged. The open interest for the strike was 485 contracts. The hope here would be that the stock would trade above $30 by the expiration, which signals the buyer has a bullish outlook on Merck. The November 27.50 calls have traded 1,700 times and were up 20 cents. Merck shares were higher by 22 cents, or 0.8%, to $27.76.

Other stocks that had high option activity were American Tower ( AMT), Yahoo! ( YHOO) and Wal-Mart ( WMT).

American Tower's January 2008 22.50 puts changed hands 10,400 times. The company is expected to release earnings on Thursday. The stock was up 34 cents, or 1.5% to $23.77. Yahoo!'s November 35 calls traded 8,400 contracts. The calls were higher by 85 cents, and the stock was adding $1.19, or 3.3%, to $36.77.

Wal-Mart had the November 47.50 calls trade 5,300 times and the November 45 puts exchanged 4,700 times. The stock was gaining $1.44, or 3.2%, to $46.94.

To view Mike Marino's video take on today's option action, click here.

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