Baked Spaghetti

½ cup chopped onion
1 (28 oz.) can diced, peeled tomato with Italian spices
1 (4 oz.) can mushrooms, drained
1 can sliced olives, drained
12 oz. spaghetti, cooked
2 cups shredded cheddar
2 cans cream of mushroom soup
¼ cup milk

In large skillet, sauté onion in butter until tender. Add tomatoes (with juice), mushrooms and olives. Simmer uncovered for 10 minutes. Place ½ of cooked spaghetti into a greased 9x13-in. baking pan. Top with ½ sauce, then ½ cheese. Repeat layers 1 more time. Combine soup with milk and pour over top; sprinkle with parmesan cheese if desired. Bake uncovered for 30 minutes or until heated through.