Put Volume Spikes in TiVo After Patent Appeal

Shares of TiVo Inc. (NASDAQ: TIVO) are plummeting today by 40.37% to $10.36 after the U.S. Court of Appeals said they would revisit the company’s video recorder patent dispute between them, Dish Network (NASDAQ: DISH), and EchoStar (NASDAQ: SATS).

TiVo has now given up nearly all of the gains it had experienced once the court ruling ruled in their favor. Put volume is spiking in the name with 41,000 contracts traded within 30 minutes of that announcement. The majority of the action has been buying in the May contracts; the May $10 put has now traded 11,000 times.

Share volume is running at 19.5x the daily average.

I think there may be room for a long trade in TiVo, betting that the company comes out ahead in the rulings once again. Buying a high flyer like the August $16/19 call spread for $0.26 looks like a decent lotto ticket.

Max gain would be $2.74 or 1,053%.