Bulls hope TiVo will fast-forward

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TiVo is drawing bullish option activity ahead of its earnings report tomorrow.

More than 8,200 January 11 calls traded in a strong buying pattern on Friday, led by prints of 3,488 and 3,000 that went for $1.08 and $1.23, respectively, according to OptionMonster's real-time tracking systems. The volume was well above the strike's open interest of 2,605 contracts before the session began, indicating that new positions were established.

These calls lock in the price where traders can buy the stock through mid-January, no matter how far it might rise. But these contracts will track the share price closely because they are in the money and could rapidly lose value if shares stay at current levels or decline in that time.

TiVo rose 3 percent on Friday to close at $11.33, just a penny off the session's high and breaking back above its 50-day moving average for the first time in nearly three months. The digital video-recording service has been trapped in a tight range since gapping down from the $14 level on June 7, after settling a long-running patent dispute with Google and Cisco Systems. The company is scheduled to announce second-quarter results after the market closes tomorrow.

Total option volume in the name topped 12,500 contracts on Friday, nearly seven times its daily average for the last month. Overall calls outnumbered puts by 11 to 1, reflecting the session's bullish sentiment.

—By CNBC Contributor Mike Yamamoto

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Mike Yamamoto is managing editor for OptionMonster. Yamamoto has no positions in TIVO.