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

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Published: April 10, 2012 11:20 am

Last Updated: April 27, 2020 11:21 pm

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

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