NEW YORK (Reuters) - Trading in a key technology fund's options showed signs of growing bullishness on Monday ahead of earnings reports this week from big names in the sector, including Apple Inc (>> Apple Inc.), International Business Machines (>> International Business Machines Corp.) and Microsoft Corp (>> Microsoft Corporation).

Shares of the Technology Select Sector SPDR exchange traded fund were up 29 cents at $43.73 on Monday, just shy of the all-time high of $43.81 set on May 27.

While recent trading in the ETF's options has been mixed, the options found favor with bulls on Friday. A trader appears to have bought 40,500 calls in an apparent bet on the ETF's shares rising above $45 by mid-September. The trade opens the biggest block of open interest in the ETF's options.

Sentiment for the sector seems to have been boosted from Google Inc's (>> Google Inc) strong quarterly results on Thursday, which propelled its shares to an all-time high, strategists said.

The effect was most noticeable for options on Apple, scheduled to report third-quarter revenue and profit results on Tuesday. Since Google's results, there has been a significant pick-up in demand for Apple calls, usually used to place bullish bets on the shares.

"It just seems that as if Google ripped and traders came in pretty aggressively to set up on the long side in Apple," said Jim Strugger, a derivatives strategist at MKM Partners.

By Monday afternoon, Apple's options volume was at 1.2 million contracts compared with an average daily volume of 820,000 contracts, according to Trade Alert.

Calls betting on Apple shares rising above $140 and $135 by Friday, were the busiest, with combined options volume of more than 100,000 contracts.

Microsoft and IBM also attracted brisk activity in the options market. Options on IBM, expected to post quarterly results after the close of trading on Monday, were especially busy with trading volume at 108,000 contracts, or five times normal levels, according to Trade Alert data.

(Reporting by Saqib Iqbal Ahmed, editing by G Crosse)

By Saqib Iqbal Ahmed