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Plenty has been written about Sirius XM's (NASDAQ:SIRI) forthcoming earnings announcement. There's enough controversy surrounding the company's prospects and future intentions that Al Franken might launch an investigation. I won't get into projections and estimates and pinpoint price per share predictions. Others have done an admirable (and not so admirable) job covering these important parts of the Sirius story.

Because I tend to use options in much of my trading, I will focus on options strategies investors can use to play not only earnings, but Sirius' future whether they hold the stock long or have no position. First, I must cover several key points regarding the company pursuant to earnings.

On Tuesday, SIRI hit $2.00 per share. It triggered enthusiastic responses from many bulls. Sirius, oft-targeted by lazy writers who use lots of word play and such, did not sport a deuce for long. Lazard Capital dinged the stock on Wednesday, downgrading SIRI from buy to neutral on concerns that SIRI's history of issuing strong guidance will end next week. The firm also thinks Sirius will refrain from aggressively raising its prices later this year because of competitive concerns. While conspiracy theorists will point to a hatched plan to get shares for "cheap," Lazard probably wants to take profits on what it still refers to as a "very good growth story."

Much like Citibank's (NYSE:C) holiday season tryst with $5.00, SIRI will likely turn on a dime one way or the other. As one of SIRI's top talents sings, you don't want to "get caught on the wrong side of that line." I think that's what sits behind Lazard's move. If earnings depress, Lazard obviously looks good in the short-term. If earnings impress, they are banking on investors having priced quite a bit of the upside into the stock prior to the release.

Investors will place much of their focus on three key things from the report and call -- subscriber growth, churn, and the company's progress servicing its debt. If you take a long-term view on the stock, I am not sure the first two points matter much. While it certainly would not be a good sign if Sirius reports lackluster subscriber metrics, particularly in an environment of brisk auto sales, it's not a certain death knell.

What makes or breaks Sirius (and SIRI), long-term, is solely the way it positions itself against increased competition from Pandora, Clear Channel (CCMO.PK), Apple (NASDAQ:AAPL), and others. You never know what the latter has up its sleeve, plus an Internet radio service other than Pandora could make a play that challenges Sirius. Speculation aside, one thing is certain -- competition is fierce and it's not about to subside.

As it stands today, I think Sirius ultimately succumbs to one or more competitive threats, remaining a niche service for diehard fans of one or more of its talents and folks who just cannot get past ad-supported media. As such, it would struggle for survival, trade closer to a dollar, and hope for a buyer with deep pockets and big plans. I think Mel Karmazin recognizes this reality. And, the excellent CEO that he is, he's clearly done something about it. SatRad 2.0 will make or break this company. And I think we'll hear quite a bit more about it on Tuesday's earnings call.

I fully expect Karmazin to unveil new details about SatRad 2.0 on Tuesday and possibly even announce its early release. While the street would react positively to this news, I don't think big money has the final say here. As always, consumers do. SatRad 2.0 needs to be so big, so innovative, so useful, so "cool" that it takes Sirius headfirst into the mainstream. It needs to make Sirius hip. Today, Sirius sits about one step above terrestrial radio in terms of coolness. If you don't think social cache matters, think again.

People with significant amounts of disposable income -- from hipsters to business people -- buy Apple's products not simply because they work well and are useful and innovative, but because they are cool. When you pull an iPhone out of your pocket or open the passenger side door to your Mercedes for your date, for that matter, it says something about you. It's a superficial world we live in, but it's one of the main drivers behind Apple's success. People don't simply pull their iPhone out of their pocket randomly on the subway because they are bored, they do it so other people can see them. Sad, but true. It's akin to the hipness of Twitter and Facebook. People use these interfaces to make themselves appear cool and accomplished to their peers. It gives everybody the chance to go to their high school reunion as the person they want everybody to see.

Along similar lines, SatRad 2.0 needs to transform Sirius into something people talk about in coffee shops. It must create a buzz in more than limited circles. It needs to make the name Sirius or SatRad as cool to drop as Pandora, iPod, or Netflix (NASDAQ:NFLX). It needs to transform people like Kid Kelly into household names like Ryan Seacrest. Sirius certainly has the types of talent you've likely never heard of who are more than capable. It needs to give Springsteen fans such as myself something more than the same bootlegs over and over again. SatRad 2.0 needs to transform the way we consume media, get around, find information, and allow ourselves to be entertained. It's got to be that good.

That said, if you are decidedly bullish or bearish on the stock the plays are quite obvious. You go long, you short it, you buy calls or puts. On the short-term, you'll likely come off as a clear winner or loser. If I were to play the stock ahead of earnings, I would take a longer view and use options that do not expire for several months.

If you hold a moderately bullish to bullish longish-term view -- meaning you anticipate a successful release of an incredibly groundbreaking SatRad 2.0 and a strong holiday season for Sirius -- I suggest one or two options plays.

One strategy involves selling put options. When you go short a put contract, you effectively go long the stock. You need to go out to December to find any premiums worth writing home about. If you are comfortable owning SIRI at $1.50 a share, you could sell the SIRI December $1.50 put for roughly $0.10. For each contract you sell, you agree to purchase 100 shares of SIRI at $1.50 if the option buyer exercises the contract. Because you keep the premium, you would effectively be forced to buy SIRI for roughly $1.40 a share. If SIRI shares skyrocket, you sit and do nothing, the options expire worthless, and you keep the premium. With such a low stock price, the margin requirement is not too steep, so you could make a pretty penny on the premiums alone. If you are put the shares, you need to be correct on your long-term bullishness or you could get burnt, but it's better than getting burnt from around $2.00 a share.

While I am not this bullish on the stock, I have to say, if you are, the $2.50 calls from June right through January 2012 look downright cheap priced at $0.01 (June), $0.07 (September), $0.10 (December), and $0.13 (January). Buying a call gives you the right to buy 100 shares of a stock at the strike price on or before the options expiration date. If earnings impress and SatRad 2.0 proves to be a groundbreaker, this stock will see $3.00 by the end of the year, if not sooner. While somewhat of a lottery ticket, the risk/reward ratio is firmly slanted toward the reward side. You could exercise your options and buy SIRI at $2.50 per share or sell the premium for a nice profit. I think you have a better chance putting money you could afford to lose toward that play than you do blowing it in Vegas or at your local casino.

Disclosure: Author may initiate a long or short position in AAPL or SIRI at any time, most likely via options. Author is short NFLX via a long position in NFLX put options.

Source: Using Options to Play Sirius XM Earnings