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Bulls Take Notice as Sirius XM Powers Higher

Call volume rises as SIRI hits its loftiest mark since March 2008

by 1/3/2013 1:31 PM
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Bullish speculators have taken notice of Sirius XM Radio Inc's (NASDAQ:SIRI - 3.07) solid start to the new year, with the stock tacking on more than 6% over the past two days. During Wednesday's session, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) bought to open 5,770 calls on SIRI, compared to 953 puts. The resultant single-day call/put volume ratio arrived at 6.06.

It's a trend that's being echoed in today's session, with call volume outstripping put volume by a margin of nearly 7-to-1. Of the roughly 18,000 call contracts that have changed hands so far, more than 7,300 have crossed at SIRI's January 2013 3-strike call. A healthy portion of these have traded at the ask price, and data from the ISE shows at least a portion of today's activity is of the buy-to-open variety.

By purchasing these near-the-money calls to open for a volume-weighted average price (VWAP) of $0.08, traders need SIRI to finish above the $3.08 mark by the close on Jan. 18, when these options expire. This breakeven level is a chip-shot away from the stock's current price.

As touched upon, SIRI has come out of the gate running in 2013, including tagging a near five-year high of $3.08 in today's session. Should the equity be unable to maintain this momentum over the next three weeks, the most today's call buyers stand to lose is the initial premium paid.

At last check, SIRI had charged 1.7% higher in today's session to linger near $3.07.


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