RealNetworks Draws Heavy Call Buying

By Pete Najarian, co-founder of OptionMonster

NEW YORK (TheStreet) -- RealNetworks(RNWK Quote) rose more than 6% Monday along with heavy upside options activity.

Volume was nothing short of explosive in both stock and options trading, according to OptionMonster's real-time tracking systems. The January 5 strike has averaged just 42 calls a day, but Monday it saw more than 31,611 change hands for between 15 cents and 40 cents in a strong buying pattern against existing open interest of 1,429 contracts.

Stock volume was nearly 3.5 times the average turnover, pushing the Seattle company up 6.2% to $3.61 in the regular session and another 1.1% in after-hours trading. Shares of the digial media company are up some 35% in the last month.

For the calls purchased Monday to turn a profit, RealNetworks would need to rise as much as 50% by mid-January, when the options expire.

It was unclear what was driving all the activity in RealNetworks, which reported a wider-than-expected loss in July for the second quarter along with declining revenue and write-offs on the value of its assets. More recently the company has gotten mixed news, gapping higher earlier this month with its new app for Apple's (AAPL Quote) iPhone but then gapping lower the very next day when JPMorgan downgraded the stock, dismissing the potential for upside from the deal.