In recent articles, I posted the numbers of curiously high call options activity in SIRI for the Sept $1.00, Dec $1.00 and January $2.50 strike prices. As we draw closer to these dates and I see the stock price begin to stagnate a bit, another possibility begins to form in my OCD brain. That possibility has more to do with call options traders selling covered calls against their existing shares to either offset prior losses or simply earn some extra money while they wait for their shares to gradually rise. When I looked a little further into each strike price and saw deltas of $.02 to $.09 per contract, this possibility seems a bit more plausible than the idea of that many contracts being scooped up from sheer bullish sentiment.

For those of you that are blinking your eyes in confusion; I’ll try to explain what this all means without putting you to sleep with boredom.

Recently I read an article from a popular technology web site in which the author believes that satellite radio will die this summer, as a result of the iPod and iPhone coming out with a new Broadcom (BRCM) BCM4329 chip that would give them 802.11n wireless capability. This means that you will be able to tune your FM radio to the frequency that the device is broadcasting and listen to online radio and your digital library through your car stereo. That's true. It's a nice feature but it isn't exactly a new idea. So let's talk reality.

Cost. The cost of online streaming an 802.11 iPhone is $30.00 in addition to the standard phone plan which is $100.00 or so. Satellite radio is $12.00.

As the expected somber news of Sirius' (SIRI) earnings call drilled the stock by 20%, we now find that it seems to be holding at a .40-ish support trend line. Subscriptions are down as new car sales continue to plummet. Revenue is up but let's face it, we still have a speculative stock on our hands. OK, let's speculate on a few small points.

1. Toyota (TM) recently announced that they are getting on board and putting satellite units in more models. To quote a recent article from The Wall Street Journal, "Toyota Motor Sales USA, says satellite radio was factory installed in four times as many cars in the year ended March 31 as in the year-earlier period. Growth rates should be similar this year." You mean customer conveniences are integral to selling a car?? Gee, that's a shocker.
2. The new car market at some point will recover, especially when the used car market prices get too high, which is already happening.
3. Terrestrial radio will continue to lose market share when sales of new car radios offering a la carte subscriptions begins to take hold.
4. Apple (AAPL) applications are paving the way for universal cell phone apps.

None of these points are individual home runs and of course, the situation with GM (GM) and Chrysler is definitely not helping the near term prospects. But looking at it from a long term business perspective, I see some great things in the works.

As Sirius retraced back to a support level Monday the options volume continues. I will only list the strikes with a relative open interest.

June Calls 1.00 strike 1,600 contracts

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.

No matter what happens, I will still shell out $12.00 a month for my radio service.

It's hard to get motivated when the press publishes "It's the end of the world" each morning as we sip our coffee and ponder the fate of diminishing investment accounts. No wonder people are cashing out $300 billion in money market funds and stuffing it under their mattresses.

Of course, withdrawing large amounts of cash only makes the problem worse. Compound that with our well organized Congress, who instead of passing an obviously necessary economic rescue bill decided to get into a urinary contest with each other about who's fault it is. As a result, we have to watch the DJI fall out of the sky like a plane with no wings looking like an freshly cooked hot dog.

I'll say what is currently on everyone's mind. What a complete disaster this whole Sirius / XM (SIRI) situation has become.  As I write this I have watched SIRI officially become a penny stock again; levels that have not been seen since it emerged from bankruptcy a few years ago. The stop loss is your best investment friend, folks.

How can our Government have allowed the FCC to drag their feet for 18 months without mandating a time restriction on future decisions?  Yes, yes, of course we all realize that there are many other important issues to be addressed that our Government is dealing with. The energy crisis that caused the auto crisis and food crisis, the housing crisis that caused the credit crisis, the Iraq crisis that caused a world crisis, and so on and so forth.  I would, however, like to point out that gross negligence of this magnitude in one of our branches of government certainly deserves a second look at a minimum. After all, our whole system hinges on public faith. Take a look at the consumer confidence index right now and you will see the level of faith I speak of. 

There is talk that the FCC may still mandate Sirius XM (SIRI) receivers be HD capable. They just can't leave well enough alone can they? Of course, the notice of inquiry comes from Clear Channel and iBiquity itself which is producing the HD system. Shocking I know.

The satellite industry has spent billions developing and producing receivers to liberate the masses from the stranglehold of terrestrial radio. Clear channel is trying to go back to bullying 'ol reliable and spineless FCC into letting them leach HD technology onto satellite receivers without having to spend the money to compete hardware for hardware. I say sure, let them do it. But pay the owners of satellite technology and the manufacturers of the receivers for the right to do it. Otherwise, use your own money to develop the separate HD receiver and do it the hard way like Sirius did. Then Sirius can lobby against Clear Channel to make HD receivers Satellite capable. Fair is fair right? No of course not my friends. Not when it comes to the self serving and manipulative behavior of politicians and lobbyists.

I would like to address the criticism that Jim Cramer has received concerning Sirius Radio (SIRI). On the surface it might seem to the uneducated person that he retracted his "buy" opinion after the deal was done and was responsible for sending the price downward. For all of you who think this way, you should be ashamed. I would like to first point out that I own 15k shares of Sirius and have felt the pinch along with everyone else so I have no personal interest in defending Jim Cramer.

But let's clarify a few things here. In the 18 months leading up to the merger, I too listened almost daily to Cramer push, yell, scream, make political enemies, and name names in an effort to tell the world why the merger should happen. In doing so, many people jumped on the band wagon, bought a $3.00 lottery ticket, and envisioned themselves calling their bosses from their cell phone to tell him/her what to do with their jobs while boarding a plane to early retirement on a tropical beach. Admit it. You thought about it didn't you?

You have to wonder what Mel Karazmin has up his sleeve next now that he has managed to pull off the merger of the decade. Now of course comes the enormous task of convincing Wall Street that satellite radio is a profitable enough business to keep the naked shorting wolves at bay. Although it is encouraging that short interest in SIRIXM (SIRI) (I PRONOUNCE THEE SERICKSUM) has been cut in half recently, it doesn't exactly fill me with warm fuzzy thoughts either. After all, shorting is what has pounded this stock into dust in the last 30 days.

Regardless of Mel's recent appearance on Mad Money to calm stock holders, there is still the underlying question of what the future holds for satellite radio. It is no secret that I think the Internet is going to be a large competitive factor; especially when I read that Chrysler is fitting vehicles with wireless routers with a $29.00 per month subscription rate.

There has been much speculation concerning the future of satellite radio and the competition it faces from the likes of iPod and Internet radio. Lets break it down.

iPod

For all the discouraged, disillusioned and frustrated common stock holders of Sirius XM (SIRI) who are now wringing their hands with worry wondering what happens from here, well, it is really anyone's guess. And I'm guessing with you.

After the sale of discounted shares at $1.50 the stock fell so far below the 21 day moving average that it needs a helicopter to get it up. However, it would appear that a support level has been reached and some stabilization may be coming. Let's review some of the pro's and cons of the merger.

Now that the marriage of Sirius (SIRI) / XM (XMSR) has set a new precedent in mergers, you have wonder how many other companies will take a swing at cost conservation that would not have been tried before this. One area that comes to mind is Dish Network (DISH) and Direct TV (DTV). Although they did try to merge in 2002, it is interesting to consider the possibility that they may make another attempt.

A lot has changed in six years after all. I severely doubt they would get consideration for one very large reason: competition in rural areas. Satellite radio has competition from Internet, terrestrial radio, and devices like the iPod; all available for competition in just about every corner of America.

I would like to first clarify that in no way is this article written in support or opposition of the Sirius (SIRI) / XM (XMSR) merger. It is strictly an opinion on the actions of the FCC.

So Wishy Washy Adelstein retracts his vote on the SIRI / XM merger after first setting conditions for approval and then stating that there was room for negotiation of his conditions. I would now like to dissect his statement regarding this reversal.

American auto manufacturers are in a world of hurt. I am talking about a beating of epic proportions. Is this the result of a sluggish economy and awful fuel prices? Well, yes of course it is; but only to a point. Let's face it, American manufacturers have been in a free fall since May of 2000, long before our current fuel crisis. Although Chrysler has been at the forefront of design (how can you not love the '09 Challenger?) it just hasn't been able to keep one foot out of the grave. Having worked for Chrysler and GM (GM) during last 15 years I can tell you that Chrysler in particular is probably a walking corpse.

American companies are their own worst enemy and just plain guilty of "too little too late" tactics to rejuvenate their bottom lines. Yes, they have made great strides in initial design quality over the last 10 years but the area in which they continue to fail is long term mechanical reliability (oh the horror stories I could tell you) which is the most important criteria to their most important customer base; women, women, and women.

We have a potential deciding vote on the marriage of Sirius (SIRI) and XM (XMSR). Adelstein says he would vote in favor of the deal as long as the company would agree to a six-year cap on subscription rates as well as relinquish 25 percent of all channels to public or minority-focused stations.

While they are at it, how about a ruling that 99% of all profits they do manage to squeak out be used for confetti during high school football games in climates under 72 degrees on the last Friday of each month while hopping on one foot singing Ring Around the Rosie?

I'm sorry, I realize that this is old news but I just have to put my one cent thought in on this subject because I am literally sickened every time I see news about this company. "The Consumer Coalition For Competition In Satellite Radio". Are you serious? I mean really, are you kidding me? Yes, I have read the news articles about the NAB being linked to this company and how one person is linked to another office who's cousin's next door neighbor works for the NAB ...... blah blah blah. Forget all that for a second.

Is anyone with an IQ over three expected to believe that a group of "concerned citizens" actually formed a company, built a web site, and are paying $25,000 - $50,000 dollars per month in rent for an office in downtown Washington D.C. because they feel that strongly about a $12.00 radio subscription?

FCC to approve Sirius (SIRI) / XM (XMSR) merger by the end of the second quarter. Yawn...

And so passes June 2008. The lettuce continues to rot on the dock and tax payer money is still circling the drain. For me, this merger is no longer about anti-trust issues. It is about our Government failing its people. The rejection or approval of these companies has been delayed for one reason only. Nobody wants to own the final decision. No one wants to be responsible.

The fact that Microsoft (MSFT) stock has been a bollinger band traders dream for the last six years is no fluke. People have been waiting for the XP Killer Windows Vista to come out for some time. Now it is out and Microsoft is still trading in the same channel.

Oh, wait, it did poke it's head above 30 for a time when there was talk of a Yahoo (YHOO) buyout. From a sales standpoint Vista has been a flop. From a personal perspective I can see why. It's terribly slow, the security settings are so restrictive to non- administrator accounts that the average user has a lot of difficulty using them. People are purchasing Vista machines and putting XP on them, myself included. Sure, the GUI is nice and pretty and it seems to allow basic users without networking experience to map a drive with relative ease but does that make it worth the five plus year wait?