Heavy Call Options Action for Sirius

Now that Sirius (SIRI) is off the S&P detention list the price action seems to be making some sort of a statement. Looking at the chart Friday, it blasted through the bear flag resistance level, and seems to be on its way to completing the pattern, around .65-ish. Typically, nobody should take penny stock charts too seriously but in this case the pattern and volume cannot be ignored.

What I find the most interesting is that the options action is jumping like crazy. Just on Friday there were over 11,000 September $1.00 calls traded, and over 6,000 January calls at the $2.5 strike. The open interest in the January calls is over 100k. That is large for any stock, and astronomical for this stock. All I can say is with this kind of put to call ratio, someone out there is getting awfully giddy.

But don't get crazy.

If you are a long haul investor and own SIRI because you believe in the technology that it provides, then don't get too caught up in all of the emotions going on around you. Use simple rules of engagement. Never bet the farm, always think about a good time to take some profits off the table, and stop staring at the ticker all the time! It will only make you crazy. That's right, I see you staring at it with a crazed look in your eye.

What the average investor should be concentrating on right now is this: The farther north SIRI goes and stays there, the farther away it will be from any more talk about a reverse stock split. We don't need the grim reaper knocking on the door once again. So far it seems to look good for the immediate future. So leave the major dollar trading to the people who have the grapes to put that kind of green on the line and swing for the fence. I know I ain't one of them and neither should you be.

Disclosure: Long SIRI.

Comments

[classixm:]

Great update and thanks for the good news! i am long SIRI as well from .13 so i like the option numbers so we'll just sit tight and hang on for the ride!

Apr 19 09:07 AM

[mlongj:]

Hey Gino! Another fine article! Thanks for the technical analysis on SIRI. It provides a clearer insight for investors since the Liberty engagement has been completed.

It certainly looks good going forward, but I do have a question for you. What is your best guess for SIRI by the end of the year. Will this company have to use the RS to get over a dollar, or do you feel this could rise above that level before delisting becomes a more pressing matter. It certainly seems possible that the SP could return over a dollar on its own, but this is just my opinion. Alot has happened since February and there are still 8 months left in this year.

Thanks for the updates and encouragement for the longs!

Long SiriusXM

Apr 19 10:34 AM

[Neal Barkett:]

Good stable advice.

Apr 19 10:37 AM

[relmar2003:]

I dont believe SiriusXM wants this stock over $1, im my opinion. Why Im out as it approaches $1. They want a huge retrace then a climb back to prove it needs it, or they will announce the split on strength as it approaches $1 the first time. This stock MUST R/S. All long term investors should want this if its done during a time of strength. Time to buy a ton of cheap shares for pennies is over. Gino your dreaming. This R/S is 100 percent coming, IMVHO. Only way to avoid it would be to clear $3, or $4 range on its own. (Not very likely).

Apr 19 01:02 PM

[User 321:]

Well said Gino....Well said........Thanks.

Apr 19 01:19 PM

[shure46:]

relmar - i think you are right ...... I think siri wants to reign in some of these shares , regardless if it is a delisting issue or not ...... just being at a buck or two is not where they want this stock .......... My question is whether or not to hang on once we pass a dollar ...... because I am thinking a 1-20 RS is coming ....... and from 20.00 pps , ( unless we have amazing earnings ) , it goes down to 10.00 pps ( basically equal to .50 pps we have now ) ......... I am at 3.00 to break even , and frankly I don't even care now if I break even , I have made my losses back elsewhere ...... I would be content to walk away with 50% ( 1.50 pps ) , but hell I don't want to miss a break even or a profit , and I can hold for a while ( couple of years or so if I have to ) ........ but I just see a hard road to 3 or 4 bucks , unless we get some real earnings ....... no matter what , siri is still in the red , and that cannot continue indefinately , I don't care how big your cash flow is ....... ya gotta make a profit sooner or later

Apr 19 10:16 PM

[Far away:]

Relmor and shure46, I believe that
- Mel will bring the company into GREEN within this year.
- Economy and Auto Sales will be improving
- iPhone application will improve retail sales
- SIRI has blessings from Liberty

I do not see any downside here.

Personally, as far as the SP is above $1 to avoid delisting, I do not prefer r/s.

Apr 20 12:40 AM

[ecliptix543:]

relmar, By 'huge retrace' you mean back to the .20's or .30's? What info leads you to this conclusion? thanx

Apr 20 05:22 AM

[Bud man:]

Gino
How the hell dd you know I was staring at the screen
Great call!!!!!!!!!!!!!!!!!!!!!

Apr 20 08:52 AM

[261133:]

Siri will go to 1 $ , give or take 10 cents, probably in the next 3 to 6 month. A R/S won't be necessary, but I agree it is coming and will drive the stock back by 50 %, maybe even more.

Apr 20 01:12 PM

[connorport:]

Agree!! The only other solution would be to buy Liberty out of the deal when they sell their XM assets after everything and everyone has converted to SIRI sat paths. Remember!! This stock is held for a reason and debt holders converted for a reason. Lets hope Mel acts quick to eliminate the debt and start buying back shares instead of RS. Probably wont happen but its a nice dream.


On Apr 19 01:02 PM relmar2003 wrote:

> I dont believe SiriusXM wants this stock over $1, im my opinion.
> Why Im out as it approaches $1. They want a huge retrace then a
> climb back to prove it needs it, or they will announce the split
> on strength as it approaches $1 the first time. This stock MUST
> R/S. All long term investors should want this if its done during
> a time of strength. Time to buy a ton of cheap shares for pennies
> is over. Gino your dreaming. This R/S is 100 percent coming, IMVHO.
> Only way to avoid it would be to clear $3, or $4 range on its own.
> (Not very likely).

Apr 20 02:20 PM

[connorport:]

Someone is betting the stock up to the tune of 500 million share purchases in 3 days. Someone beyond our level with a fly on Mels shoulders whispering whats really about to happen that we can only speculate and blog about. RELMOR!! Lets hope we get surprised. I've been surprised for the last two years with this stock. Just glad i bought all the way to the bottom.

Apr 20 02:29 PM