By Chris McKhann
A trader is apparently combining stock with huge long-term call selling in a strategy that sees Sirius XM Radio (SIRI) trapped in a range with little upside.
The option volume for SIRI tops 26,000 contracts, more than twice its daily average. All of this volume was in the calls. This was dominated by a single print.
A trader sold 25,000 January 2014 2.50 calls for the bid price of $0.43 on a wide bid/ask spread, according to optionMONSTER's systems. The previous open interest was 15,093 contracts, so this is a new opening position.
SIRI is down 2.37 percent to $2.27, but the satellite-radio operator remains in an uptrend. Since trading at $1.40 in early October, the shares have been posting higher highs and higher lows pretty consistently.
Less than two minutes after the calls were sold, we see the largest trade in SIRI stock with 1.45 million shares bought for $2.31. It seems likely that this stock is tied to the options, creating a directionally neutral strategy that is focused on lower volatility and range-bound trading going forward.