Call selling in CBS Corp. (NYSE: CBS)

Investors looking to buy call options in CBS Corp. (CBS) have a plentiful supply today thanks to at least one call seller who boosted volume during midday trading.

By 1 p.m. EST, 6,500 way-out-of-the-money January 2011 17.5 calls crossed the tape with the stock currently trading up 51 cents to $13.66 per share. These options are home to current open interest of just 489 contracts, indicating investors traded these calls to open. The calls have climbed just 10 cents on the day to 90 cents, which suggests the majority of this action occurred on the sell-side because the price of the option has not rallied as much as the delta would have suggested.

Investors who sold these calls are betting the stock could experience limited upside, and close lower than $18.40 at January 2011 options expiration. These calls have an implied volatility of 40, compared to a 30-day historical volatility of 30%.

Call selling activity such as this does not mean investors should run out and sell their CBS shares. After all, this could be an investor who is long the shares, and is merely selling these calls to create a covered call position. CBS is scheduled to announce earnings figures on Feb. 18 after the market closes (analysts expect earnings of 25 cents per share). However, CBS is likely seeing a little bit of strength today because its competitor News Corp (NWS) announced better- than-expected earnings.