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Digital Media Company Sees Heavy Upside Options Activity

RealNetworks rose more than 6 percent yesterday 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 yesterday it saw more than 31,611 change hands for between $0.15 and $0.40 in a strong buying pattern against existing open interest of 1,429 contracts.

Stock volume was nearly 3.5 times the average turnover, pushing RealNetworks up 6.18 percent to $3.61 in the regular session and more in after-hours trading. Shares of the digial media company are up some 35 percent in the last month.

For the calls purchased yesterday to turn a profit, RealNetworks would need to rise as much as 50 percent 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 writeoffs on the value of its assets. More recently the company has gotten mixed news, gapping higher on Sept. 10 with its new app for Apple's iPhone but then gapping lower the very next day when JP Morgan downgrated the stock, dismissing the potential for upside from the deal.

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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