The Wall Street Journal-20080201-Legal Win Sparks TiVo Calls

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Legal Win Sparks TiVo Calls

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Traders snapped up TiVo Inc. contracts after it scored a major legal victory against Dish Network Corp. over patents related to TiVo's time-shifting video-recording technology.

TiVo shares rose 29% to $8.77 after a U.S. Appeals Court affirmed a lower court decision and the $94 million in damages set by a Texas jury in 2006. The court ruled that Dish, formerly known as EchoStar Communications Inc. before it split into two businesses this year, illegally used TiVo software. The court reversed a ruling that EchoStar infringed on hardware technology owned by TiVo.

The positive outcome sparked activity in TiVo calls. More than 43,000 contracts traded, or nearly double the put activity.

Among the most active was the February 7.50 call, which enables traders to buy TiVo at $7.50 when it expires. More than 22,000 contracts changed hands, or more than double the open interest.

More than 14,400 February 10 calls traded, or slightly higher than the open interest.

On the put side, more than 6,200 February 5 contracts changed hands, versus open interest of 3,400. Nearly 5,900 February 7.50 puts traded, versus open interest of 3,800.

Traders circled L.M. Ericsson Telephone Co. ahead of today's fourth- quarter earnings report. Wall Street is looking for a steep slide as the phone customers slow down the pace of their spending on telecom equipment. Ericsson rose 0.7% to $22.72.

Activity suggests traders are bearish on the company, as more than 9,600 puts traded against 6,400 calls.