Is the Options Market Betting on a Takeover?
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.”
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Trader disclosure: On April 10, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL CALLS; Pete Najarian is long AAPL; Pete Najarian is long BAC; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long MS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX CALLS; Pete Najarian is long COP; Pete Najarian is long PEP; Pete Najarian is long PFE; Pete Najarian is long BTU CALLS ; Pete Najarian is long HPQ; Brian Kelly is long USG; Brian Kelly is long SPY PUTS; Brian Kelly is long GERMAN BUNDS; Brian Kelly is short SWEDISH KRONE; Brian Kelly is short EUROSTOXX FUTURES
For Scott Nations
Scott Nations is long BAC
Scott Nations is long CITI
Scott Nations is long SPY
Scott Nations is long TIVO CALLS
For Dan Dicker
Dan Dicker is long Oil Futures
For Willie Williams
Nothing to disclose
For Michael Pachter
Nothing to Disclose
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