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This is typically associated with the gay Hanky Code and if worn on the left, it means that you like to fist guys; if worn on the right, it means that you like to get fisted. UNLESS there is a white stripe and then it just means that you like to shave or get shaved or a black stripe denotes you are or like bears.
I caught Mark at the bar last night with a red hanky on his right arm; I had no idea he was into fisting.
red hanky by Benjamin M. Dover August 22, 2008
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Red Handy 

When a menstruating woman pleasures herself and her dude walks in a catches her and he’s disgusted so to try and make it better she give him a hand job with her bloody hand.
Guy 1: Why is your dick red, I can’t put that in my mouth?
Guy 2: Oh, craziest thing, I caught your sister masturbating and to keep me from running and telling everyone, she gave me a Red Handy.
Guy 1: GROSS DUDE SHE’S ON HER PERIOD!
Guy 2: Haha, exactly.
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