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Option Brief: Sirius XM Holdings Inc. (NASDAQ:SIRI) followed the broader equities market into the red yesterday, ending at $3.43 to match its lowest closing price of 2014. Nevertheless, options traders remain optimistic, as one speculator yesterday gambled on an intermediate-term rebound for the streaming music provider.
During the course of the session, SIRI saw roughly 13,000 calls change hands, compared to fewer than 400 puts. More than half of the action transpired at the June 3.50 call, where two blocks totaling 7,500 contracts traded the final hour of trading. The bulk of the calls crossed at $0.20 -- closer to the ask price at the time, suggesting they were bought -- and open interest at the strike skyrocketed overnight. Plus, the International Securities Exchange (ISE) confirms buy-to-open activity.
The goal of the call buyer is for SIRI to climb back atop $3.50 by June options expiration. More specifically, the trader will profit if SIRI gains more than 7.9% and topples $3.70 (strike plus premium paid) at expiration. However, should Sirius XM Holdings Inc. (NASDAQ:SIRI) shares remain south of the strike, the most the buyer is risking is the initial premium paid for the calls.