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All Eyes on the $3.50 Level for Sirius XM Radio Inc (SIRI)

Premium sellers, call buyers, and analysts are all watching a key price point for SIRI

by 5/6/2013 1:26 PM
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Call players have taken a keen interest in Sirius XM Radio Inc (NASDAQ:SIRI) today, with volume on the stock rising to roughly 1.3 times the expected level. So far, approximately 7,734 calls have changed hands on SIRI, easily outpacing the 357 puts that have crossed the tape. For comparison, over the course of an average trading day, the satellite radio stock typically sees volume of about 9,600 calls and nearly 3,000 puts.

Today's most popular strike is SIRI's June 3.50 call, where 2,340 calls have been traded. About 71% of these calls have crossed at the ask price, suggesting they were purchased, and implied volatility is up 0.7 percentage point at 25.2%. This back-month strike is already home to peak call open interest of 48,125 contracts, and it looks as though speculators are buying to open another new batch of calls here in today's session.

Not far behind is the September 3.50 call, where 2,312 contracts have been exchanged. The overwhelming majority of these SIRI calls have traded at the ask price, and implied volatility has advanced 1.6 percentage point to 28.6% -- again, indicating that speculative players are buying to open new positions.

If these strikes sound familiar, it's because call sellers have lately honed in on the $3.50 level for Sirius XM Radio Inc. In fact, analysts are also keeping an eye on this region, as the stock's average 12-month price target stands at $3.55.

On the charts, SIRI is currently trading at $3.37, having gained more than 16% year-to-date. While the equity's positive momentum is favoring today's call buyers, it's worth noting that the stock hasn't seen the north side of $3.50 since March 2008 -- so it's easy to see why call sellers have also been placing their bets at this near-the-money strike.


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