Wednesday, January 5, 2011

TIVO - Large Bet on Stock Double

TIVO is trading $9.76, up 7.9% with IV30™ up 8.8%. The LIVEVOL™ Pro Summary is below.


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Bloomberg broke this story first from what I saw.

The company has traded over 72,000 contracts on total daily average option volume of just 8,.029. The size is in the May 17.5/20 call spread, which has traded 26,000x. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that the calls are mostly opening (compare OI to trade size).

The Skew Tab snap (below) illustrates the vols by strike by month.

I've highlighted the May strikes that traded. Note the distinct upside skew in Jan, muted but still present in Feb and then totally reversed in May... Kinda weird...

Finally, the Charts Tab (12 months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

So in early March, TIVO gapped up 60% (ish). Then, in early May, it went all the way back down and then straggled below $7. Now it's nearly $10 and someone went size in the 17.5/20 call spread. The only real news I see today is a conference where they are presenting. Also weird...

The May 17.5/20 call spread went for $0.32. It looks like you can do the May 15/17.5 call spread for ~$0.40. I dunno, that feels better to me than the 17.5/20, no?...

Either way, this is a bet that's not likely to payout , but the question to ask is:
Is the payout better than the odds? If so, it's a do. If not, it's a pass. Either way, it'll be interesting to see how TIVO and the forever patent infringement case/appeal end up. IMHO, TIVO is a great technology and it suffered from being too far ahead of its time. Maybe it will recover some of the lost rents in the court case... I guess we'll see... eventually.

This is trade analysis, not a recommendation.

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1 comment:


    Sent this out, Jeff included, at 11:30 this morning. He's a buddy of mine. Also a friend of Izzy Santiago from PHLX days.He was in our office a few weeks ago.