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Is the Options Market Betting on a Takeover?
10 Apr 2012 EDT - CNBC.com
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Fast Money trader Scott Nations has spotted unusual action that he interprets as big money betting on a takeover in tech.

“Calls in TiVo have gotten really expensive in a way that we don’t generally see,” he explains. “They’re even more expensive than puts now. That generally means options traders think a takeover is in the offing.”And in the wake of AOL’s move to sell and license patents to Microsoft for $1 billion, he thinks bet makes perfect sense. “TiVo has a bunch of patents and they’re now magically more expensive,” he says. In other words, after the AOL deal, the patents are re-priced. “Now someone could pull the trigger.”Options trader Pete Najarian appreciates Nations interpretation of the options, but he doesn’t quite agree. “I’m not seeing the extreme activity to the upside that I need to see if I were to expect something like this to happen. I’m seeing a lot of open interest but it’s at the money. I’d need to see follow up paper that says it’s going to be taken out at a premium.”

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