Stock Option Investment Advice

TiVO Partners for Profits – Covered Call

TiVo Inc. (TiVO), the leader in television digital video recorders, announced its partnership with Roxio, a leader in digital media software and subsidiary of Sonic Solutions (SNIC), has yielded the widely anticipated TiVoToGo for the Macintosh operating system. TiVo subscribers with broadband connected TiVo DVRs will be able to transfer programs recorded and stored on their TiVO DVRs to their Macs. The users can also burn the recorded programs to a DVD and enjoy them on portable iPod devices.

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TiVo’s vice president of product marketing, Jim Denney was quoted in a PR release as saying, “The demand for TiVoToGo continues to grow rapidly, especially as the use of mobile devices for viewing video becomes more pervasive. Now, through our joint alliance with Roxio, we are able to answer that strong demand by delivering TiVoToGo to the Mac platform.”

Adam Fingerman, director of product management at Roxio, added, “We are proud to be the exclusive provider of TiVoToGo on the Mac, which continues our rich history of enabling ‘firsts’ and ‘onlys’ for the Mac platform.”

Technology experts agree this is the most user-friendly platform released to date for getting digital video recordings on to computers and hand held devices.

Comcast Box to Get TiVO:
TiVo Inc. and Comcast Cable (CMCSA) announced yesterday plans to offer a cable box running TiVo’s digital-video-recorder software to Comcast subscribers.

This collaboration was first announced in March 2005 but has just now been rolled out. TiVo has been facing considerable competition from swelling throngs of less expensive DVRs.

Now, for an additional fee, Comcast subscribers can add TiVo DVR features to existing cable boxes without a visit from a technician.

Analysts are quick to note TiVo has not yet reached profitability. CEO Tom Rogers has described this upcoming release as a “major milestone” in the company’s history. He explained TiVo would receive roughly $1 of Comcast’s monthly subscriber fee. “That’s pure margin for us,” he said.

In April of 2006, Tivo announced it’s relationship with DirecTV for supplying TiVo to DirecTV’s customers was extended for three years.

Competitors for SNIC include: Apple Computer Inc. (AAPL), Sony Corp. (SNE), and InterVideo, Inc. (private).

Company Profile:
TiVo, Inc. offers a subscription-based television service enabling consumers to record and watch television as if it were a DVD or VHS tape. The service offers a platform for advertisers and audience research. As of January 31, 2006, the company had approximately 4 and a half million subscriptions. TiVo was co-founded by Michael Ramsay and Jim Barton in 1997. The company is headquartered in Alviso, California.

Potential Trades:

Covered Call – TIVO INC (TIVO) $5.61
TUKBA 07 FEB 5.00 $0.80 14.30% 4.00% 4.00%
Bull-Call Debit Spread — TIVO INC (TIVO) $5.61
TUKBA 07 FEB $5 $0.80 TUKBZ 07 FEB $2.50 $3.20 4.20% $4.90

The covered call trade, an in the money covered call, offers a solid 14.3% downside protection and a potential profit of 4.0% (40 days) if the stock remains unchanged. If the stock remains at or above the call option‘s $5.00 strike price, the potential profit remains 4.0%.

The second trade is a bull call debit spread. This trade offers 4.2% potential profit if the stock remains above $5.00. If the stock decreases below the break-even price of $4.90, the investment begins to lose money. If the stock price goes below the lower strike price of $2.50, the entire investment is lost. The net cost of this trade, per 100 options, is $240.00.

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[tags]Roxio, TiVoToGo, Macintosh, DVR, DVD, iPod, Jim Denney, Adam Fingerman, Mac, DirecTV, InterVideo, Inc., VHS, Alviso, California, AAPL, Apple Computer Inc., CMCSA, Comcast Corp. Class A, SNE, Sony Corp. ADR, SNIC, Sonic Solutions, TIVO, TiVo Inc., bull call debit spreads, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]

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