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By Jud Pyle, CFA, chief investment strategist for the Options News Network

Investors looking to buy call options in

Vanda Pharmaceuticals

(VNDA) - Get Vanda Pharmaceuticals Inc. Report

have a plentiful supply, thanks to at least one call seller boosting volume today.

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At the close of today's session, more than 12,500 out-of-the-money September 12.5 calls changed hands vs. open interest of 106 contracts, indicating investors traded these options to open. The calls dropped 10 cents on the day to $1.15 per contract, and the stock closed up 16 cents, or 1.5%, to $10.80 a share, suggesting the majority of this action occurred on the sell side. Normal daily options volume in VNDA is 1,600 contracts. The call-selling action we saw today far trumps normal options volume.

Investors who shorted these calls are looking for the stock to close lower than $13.65 at September options expiration. This is a moderately bearish strategy because the trade accounts for potentially 26% of upside for the position to turn profits.

The September 12.5 calls closed with an implied volatility of 53, compared to a 30-day historical volatility of 36%.

Call-selling activity such as this does not mean investors should run out and sell their VNDA shares. The company did not report any significant news today that could have instigated this call-selling activity, but at least one investor expects limited upside in the stock throughout the later term.

Jud Pyle is the chief investment strategist for Options News Network and the portfolio manager of Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."