H&R Block (HRB), TiVo (TIVO) Attract Option Bulls

Option traders have been bullish on H&R Block (NYSE:HRB) and TiVo (NASDAQ:TIVO), betting the shares will go up in the short term.

With markets taking a breather from oil worries, options traders staged big bullish earnings bets on tax preparer H&R Block and revisited long-running legal disputes over digital video recorders with TiVo.

Bullish H&R Block contracts changed hands at the heaviest pace in three months. In an echo of the optimistic pre-earnings bets that dominated trading early this year, traders had a preference for high-risk March call options that require a big and nearly immediate jump in the stock to show a profit. H&R Block reports earnings Wednesday after the close.

"Whenever you see people buying cheap [call] options with only a few days remaining, it's extremely bullish," said TradeKing senior options analyst Brian Overby.

Tuesday's action focused on March $16 calls to buy H&R Block's stock, contracts that expire a week from Friday. The tax-preparation company's shares were up 55 cents, or 3.8%, at $15.02 at 4 p.m. on the New York Stock Exchange.

TiVo was another draw for bullish traders who, in this case, played the contrarian as more litigation news weighed on the stock.

The company said it plans a convertible debt offering, in part to fund its legal battles, saying Microsoft filed a patent-infringement lawsuit and a complaint with the U.S. International Trade Commission. The company is already in a lengthy court dispute with rivals Dish Network and EchoStar.

TiVo closed at $8.75, down $0.31, or 3.42 percent. H&R Block closed at $15.02, gaining $0.55, or 3.80 percent.




Source