Options Action Surges as Vringo Pops (VRNG)

Shares of Vringo (VRNG) are trading higher on the session by 14.87%, at $5.22. The stock has been careening higher over the past few days on favorable steps taken by the U.S. Patent Office with respect to Google, Inc.'s Ex Parte request for Reexamination of U.S. Patent No. 6,314,420.

VRNG, which was trading at $2.78 just days ago, has now popped over 99%.

One large trader took the opportunity to collar gains on the name Friday. Over 15,000 of the November $4.00/5.50 bear risk reversals traded for roughly $0.05. Volume exceeded open interest on both strikes; today’s recalculation of open interest confirms that nearly all of the volume from Friday was new positioning.

Given that the calls were sold and the puts purchased, this is a net bearish position. While it could indicate a highly-leveraged downside play, on a risk/reward basis it seems far more likely that this is a hedge to an existing long stock position.

Near-term implied and historical volatility are registering 234% and 142%, respectively 

Vringo, Inc. is a development-stage company. The company is engaged in developing software for mobile phones. It provides a platform, which allows users to create, download and share mobile entertainment content in the form of video ringtones for mobile phones.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.