Huge Options Trade in SIRIUS XM Mutes M&A Hope (SIRI)

April 10, 2012 by Jon C. Ogg

SIRIUS XM Radio Inc. (NASDAQ: SIRI) has such a low share price that it has often been called a bit of a call option rather than a normal stock.  It is between $2.00 and $2.50 per share and it usually is on the NASDAQ most active stocks.  That is without surprise given that it has such a low share price, a cult stock following, and considering it has over 20 million paid subscribers using the service with more subscribers coming on almost each and every quarter.  So what happens when SIRIUS XM turns out to be the most active stock option chain as well?

Today’s unusual options trading was out in the January-2014 $2.50 Calls.  We have seen some 25,000 options contracts trade, which is 2.5 million shares worth of exposure on a fully leveraged basis.  This appears to be a new position as well because the open interest was 15,093 contracts before today.

The 25,000 options contracts were on the bid rather than the ask, meaning it was a sale of some sort rather than someone buying speculative calls.  Whether or not this was a hedge or just a high premium capture is hard to know, but most likely it is at least one big bet that a high-premium buyout is not coming here.  This may just mute some of the old and recent buyout rumors which we generally considered more as “hope” than reality.

JON C. OGG

Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE

Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply
clicking here
you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.


Click here
to match with up to 3 financial pros who would be excited to help you make financial decisions.