Speculation Ramps Up on Troubled Vringo, Inc. (VRNG)

Call options were unusually active on Vringo, Inc. (NASDAQ:VRNG) on Monday, with 4,749 contracts crossing the tape -- representing nearly five times the stock's average daily call volume of 972. The most active strike was VRNG's January 2015 1-strike call, where 1,683 contracts were traded. Nearly 1,300 of those January 1 calls translated into new open interest overnight, and it appears most of those options were bought to open.

Traders who bought those VRNG January 1 calls are betting on the stock to rally above $1 per share over the next three months. The penny stock has shed roughly 68% of its value year-to-date, and is currently trading flat with Monday's close at $0.95.

Despite the stock's close proximity to proverbial support at zero, there are still plenty of short sellers looking for Vringo, Inc. (NASDAQ:VRNG) to deepen its decline. Short interest accounts for nearly 18% of the equity's float, or nine times VRNG's average daily trading volume. In light of this fact, it's possible that some of yesterday's call buyers were actually short sellers looking to hedge against a short-term rally.