TIVO – TiVo, Inc. – Shares of the subscription-based provider of digital-video recording services fell as much as 7.8% today to reach a new 52-week low of $7.10. TiVo’s shares recovered slightly, trading lower by 5.85% to $7.25, as of 12:51 pm (ET). Long-term options activity on the stock suggests some traders expect shares to rebound by expiration in January 2012. It looks like one trader initiated a bullish risk reversal by selling 4,000 puts at the January 2012 $5.0 strike for a premium of $1.51 each, spread against the purchase of the same number of calls at the higher January 2012 $12.5 strike for a premium of $1.83 apiece. The net cost of the spread amounts to $0.32 per contract. The investor responsible for the transaction profits only if TiVo’s share price jumps 77% from the current price of $7.25 to surpass the average breakeven point to the upside at $12.82 by expiration day in January 2012.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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