Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

Sirius XM Holdings Inc. (SIRI) Options Are In High Demand

Sirius XM Holdings Inc. traders bought to open front-month calls on Wednesday

by 4/10/2014 10:17 AM
Stocks quoted in this article:

Option Brief: Sirius XM Holdings Inc. (NASDAQ:SIRI) options are in demand, as the equity's 30-day at-the-money implied volatility hit a 52-week peak in intraday action yesterday, before settling 4.9% lower at 40.9%. In the same vein, the stock's Schaeffer's Volatility Index (SVI) of 40% stands higher than 82% of all comparable readings from the past year, suggesting SIRI's short-term options are expensive right now, from a historical perspective.

In yesterday's session, the shares of SIRI rebounded 2.3% to end at $3.14, after falling to a near-annual closing low on Wednesday. Options traders, meanwhile, picked up short-term calls to either gamble on a significant rebound, or to hedge their bearish bets.

Specifically, SIRI -- last seen fractionally higher at $3.15 -- saw roughly 18,000 calls cross the tape, more than four times the number of puts exchanged. More than half of the action transpired at the out-of-the-money (OOTM) April 4 call, where 10,010 contracts changed hands, primarily in several mid-sized blocks at the ask price. Almost all of the volume translated into new open interest, and the International Securities Exchange (ISE) confirms a healthy portion of buy-to-open activity.

As alluded to earlier, the buyers have one of two motives: to profit from a rally north of $4 -- in territory not charted since October -- by the close on Thursday, April 17, when front-month options expire, or to "insure" their shorted shares. Short interest on Sirius XM Holdings Inc. (NASDAQ:SIRI) grew by 30% during the last two reporting periods -- and now represents 8.3% of the stock's available float -- so it's possible the speculators bought the OOTM calls to guard against a short-term ascent. Whatever the motive, the maximum risk on the long calls is limited to the initial premium paid -- though, as we already established, it is relatively hefty at the moment.


permalink

Featured Brokers
ADVERTISEMENT
Unusual Option Volume
Option Flow
ADVERTISEMENT
ADVERTISEMENT
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.