Pragmatic Call Selling in Interdigital, Bally

Briefly recapping late-session option developments in an otherwise fairly thin trading day, options trading in Bally Technologies (BYI - commentary - Cramer's Take) perked up to about 11 times the normal level as traders freshly sold at-the-money calls at the December $15 strike.

The settling price on this contract was $1.75, and the volume here did not appear tied to stock. This suggests that traders could be betting against today's 1.7% higher close for shares to $14.95. Bally's current valuation represents just about 7 times its earnings and about an $8 discount from its 50-day price average.

It was a frenzied day of trading activity for Interdigital (IDCC - commentary - Cramer's Take), the designer and developer of digital wireless telephone products. The stock bounced 25% today to close at $26.00, just $2 off its 52-week high following news that it and Samsung had asked U.S. trade regulators to defer a ruling in a 3G technology patent infringement suit that Interdigital brought against Samsung last year. The companies are reportedly near an out-of-court settlement.

Implied volatility in Interdigital options contracted today by about 14% from Friday's record-setting high, but is still at 128.6% (compared with historic volatility of 80.3%). This shows that option traders still pricing in a huge "x-factor" to this stock. Today the order flow favored calls, but rather than jockeying for upside, option traders appeared more pragmatic, selling front-month calls at the December $25 and $30 strikes in order to rake in enriched premiums.

Bear in mind that a comedown in the implied volatility of Interdigital options following a settlement, even if it comes on the heels of further upside for the stock, will likely shrink the value of call positions, making traders by and large extremely hesitant to enter new positions on the long side.

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At the time of publication, Darst had no positions in the stocks mentioned.

Rebecca Engmann Darst is the Portfolio Manager for TheStreet.com?s Options Alerts Portfolio newsletter and an equity options analyst for RealMoney Each Thursday at 6:30 a.m. EST, she delivers the early-morning lowdown on option volume and sector trends on CNBC's "Squawk Box." Prior to her work in the equity options market, she spent seven years in Scandinavia as a Copenhagen-based chief reporter for a European Commission news service, correspondent for Spanish daily El Mundo and Radio Netherlands, followed by stints at Nordea Bank and Saxo Bank.