Fast Money trader Scott Nations has spotted unusual action that he interprets as big money betting on a takeover in tech.
“Calls in TiVo have gotten really expensive in a way that we don’t generally see,” he explains. “They’re even more expensive than puts now. That generally means options traders think a takeover is in the offing.”
And in the wake of AOL’s move to sell and license patents to Microsoft for $1 billion, he thinks bet makes perfect sense.
“TiVo has a bunch of patents and they’re now magically more expensive,” he says. In other words, after the AOL deal, the patents are re-priced. “Now someone could pull the trigger.”
Options trader Pete Najarian appreciates Nations interpretation of the options, but he doesn’t quite agree.
“I’m not seeing the extreme activity to the upside that I need to see if I were to expect something like this to happen. I’m seeing a lot of open interest but it’s at the money. I’d need to see follow up paper that says it’s going to be taken out at a premium.”