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Option Brief: After seeing a surge in put activity last Friday, Sirius XM Holdings Inc (NASDAQ:SIRI) is attracting call players today. So far, around 12,000 contracts have changed hands, which is more than double the security's expected intraday call volume. By comparison, just over 1,200 puts have crossed the tape.
Leading the pack is the January 2014 4-strike call, where north of 2,700 contracts have been exchanged -- the majority of them at the ask price, pointing to buyer-driven activity. Meanwhile, implied volatility ticked higher as some of these transactions took place, suggesting that new bullish bets have been created here.
If these calls were, in fact, bought to open, the speculators are counting on SIRI to journey north of the $4 mark by January options expiration. However, since short interest accounts for 9.6% of the stock's available float right now, it's possible that some of this out-of-the-money call buying is the result of hedging activity by short sellers. Either way, if the shares remain below the strike price between now and the close on Jan. 17, 2014, the most today's traders stand to lose is the initial cash outlay.
Technically speaking, Sirius XM Holdings Inc (NASDAQ:SIRI) is up about 29% year-to-date, but has been pinned beneath the $3.90 level since an earnings-related tumble in late October. At last check, the shares were 1.6% higher to trade at $3.74.