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Surprising Options Trades in TiVo Shares

TiVo dropped on a weak earnings report this week, but the bulls would not be deterred.

OptionMonster's tracking program picked up determined call buying Wednesday as the digital-video stock probed its lows during the session. One trader amassed 7,000 February 20 calls for $0.15 as the shares made successively lower lows.

TIVO stock fell 6.84 percent to $10.22 on Wednesday, after reporting weak revenue and forecasting more of the same in the next quarter. The stock has been torn between two conflicting forces: bearishness resulting from weak revenue and customer defections, and bullishness about its legal battles with Dish Network.

TIVO has now returned to the level where it traded after gapping higher on June 3 after a favorable court ruling. The call buyer was apparently making a low-cost bet on the shares staging a 97 percent rally by February expiration.

Other investors were more conservative. Our systems detected new money flowing into the May 15 calls, which traded 1,760 times, mostly for $0.80. The February 12.50 calls, January 10 calls and December 12.50 calls were also active, but volume was below open interest.

Overall options volume in the stock was almost six times greater than average, with calls outnumbering puts by 10 to 1.

Another potentially bullish catalyst may be emerging from TIVO's new strategic relationships with Google and Virgin Media.

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David Russell is a reporter and writer for OptionMonster.

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