Tuesday, August 16, 2011

TiVo Inc. (TIVO) - Vol and Skew Move on Takeover Rumors -- A Trend?

TIVO is trading $8.49, up 1.6% with IV30™ up 3.8%. The LIVEVOL® Pro Summary is below.


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TiVo Inc. (TiVo) is a developer and provider of software, hardware, and services. As of January 31, 2011, the Company generated revenues from three sources: consumer service, developing technology for television service providers and media services.

This is an order flow note based on a takeover rumor. Here's a quick news snippet:

* Tivo (TIVO) has a quick spike in volume, following positive broker comment suggesting TIVO could be an M&A candidate.

As mentioned before, while many rumors circulate during the day, and the validity of the source of these rumors can be questionable, the speculation may increase volatility in the near term.
Source: Briefing (www.briefing.com)

So there you go... Tivo has traded 43,361 contracts on total daily average option volume of just 10,850. Calls have traded on a 2.8:1 ratio to puts. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates the action. Lots of contracts trading on the Aug 10 line, though the OI is substantially larger than the volume. Those actually look like sales -- a 10,000 lot @ $0.03.

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

As expected, the upside skew in Aug is bid. We're talking about $0.01 - $0.03 bids, so nothing too crazy. The Tivo spec is interesting to me not so much because of the options action right now, but the general tenor of IP in technology. It's almost like it's gone from a pretty "unsexy" subject, to the most sought after asset (which it should be). The IDCC and MMI (and others) excitement/takeovers may be just the beginning to a new trend (which could be short lived). TiVo's got a ton of IP as I understand it, and that might make the options market and vol start popping.

Let's finish with the Charts Tab (6 months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20 - blue vs HV180 - pink).

We can see the stock pop of late in the stock portion. The vol shows a pop in IV30™ as HV20 (realized movement) has also popped. IMHO, if this becomes an "IP rumor," watch for action, watch for vol and watch for the stock to become a news headline. You know... or not...

This is trade analysis, not a recommendation.

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