I was wandering around on the web looking for info on the origins and history of BDSM when I found this. It's something called flagging. I was wondering if anyone else has heard of this. Here is quote that explains it.

Flagging by wearing something in a back pocket has nothing to do with ordinary flags. Wearing a flag (keys or a handkerchief) hanging from one's back pocket to indicate interests has a long tradition in gay communities and is also observed by many folks doing BDSM.

Traditionally, a top flags (that is, wears the pocketed item) on the left, and a bottom on the right. The recognized hanky color for SM is black.