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Option Brief: Call players swarmed Sirius XM Radio Inc (NASDAQ:SIRI) on Friday, despite the previous day's weaker-than-expected turn in the earnings confessional (which also prompted Evercore Partners and Goldman Sachs to downgrade their ratings on the stock). Roughly 40,000 calls crossed the tape during the course of the session -- more than triple the daily norm -- compared to just 15,000 puts.
Snagging the lion's share of the attention was the December 4 strike, which saw 7,113 calls change hands -- the majority of them at the ask price, pointing to buyer-driven activity. Meanwhile, open interest surged by 3,506 contracts over the weekend, confirming the creation of fresh bullish bets. By purchasing the calls to open, the traders are wagering that SIRI will retake the $4 mark by the closing bell on Dec. 20, when the back-month options expire.
Since the satellite radio darling is currently docked at $3.75 -- and short interest accounts for 9.9% of the stock's available float -- it's possible that some of these out-of-the-money call buyers were actually skeptics looking to hedge their bearish positions. Either way, the traders can rest easy knowing the premium they paid was relatively inexpensive, as the equity's Schaeffer's Volatility Index (SVI) of 33% ranks lower than all but 21% of similar readings taken during the past 12 months.
Despite last week's earnings-induced decline, Sirius XM Radio Inc (NASDAQ:SIRI) still sports a year-to-date gain of around 30%, and remains atop its 20-week moving average, which has served primarily as support since July 2012.