Market makers just offsetting their positions to avoid risk and being subject to the stock.
May and June 3.5 calls were the second most active as of May 1st and out-of-the-money at the time.
The recent and quick run-up over $3.50 increased demand below the strike price due to large open interest. If there aren't any in-the-money contracts to exercise before expiration, I can see SIRI heading upwards today, but early into next week some consolidation to setup plays for next month.
Hedging pressures have pinned SIRI's price at the $3.50 strike.
Significant open interest and the recent run-up over the $3.50 strike, they may have only been prepared to cover in-the-money short contracts.
For certain It stands to reason "we just gained a whole bunch of new buyers in the 3.50's."
May 15 2013
The trend is higher highs and higher lows. That should be able to continue for a while yet. The caution here is that Sirius XM is approaching a valuation peak when measured against current guidance. Going beyond $3.75 will require some assumptions to be made to justify valuation. Pay close attention, because this equity is clearly capable of moves without any real compelling news hitting the wires.
May 15 2013
I think the answer here is quite simple as far as long-term holders go. Stay the course, folks. This really doesn't change my long-term target or opinion. I still see $4.25 as reasonable by the end of the year, and I think long-term holders would do themselves a disservice to sell out before the buyback is nearing completion. That means holding at what is, as I write this, a $3.59 share price.
If you need to sell soon, where is the short-term upside? I would not be surprised to see the stock run to $3.75 in the coming weeks, especially given current momentum. Those who need to sell in the near term may find $3.59 acceptable, or you may want to hold out just a little bit longer. That said, take care not to get too greedy. I always like to leave a few pennies for the other guy.
Be patient; Breakout trading welcomes volatility and the sheep will get slaughtered. See the higher highs and higher lows.
May 10 2013
Thankfully I have been correct many more times than not, but the misses still sting a bit. So have I missed another call? With many suggesting that Sirius XM is about to find its share price rolling over, my call last week of $3.50 or beyond in the near term appears as though it may not come true.
I'm holding firm, though, and I think investors, or shall I call them "traders," that get bored so quickly over the course of a single week and sell out might be kicking themselves rather soon.
It's important to maintain perspective. When the market tests your patience stick with that long-term conviction that drove you to invest in the stock in the first place. With Sirius XM investors should be well aware that a significant buyback plan is underway, and it has already been announced that hundreds of millions of dollars have been used to repurchase stock, with possibly billions more to come.
One moment you're up half a mil in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley. Are you with me ?
Liberty Soars on Sirius
By Michael Lewis
May 13, 2013
Media holdings company Liberty Media (NASDAQ: LMCA ) , controlled by deal maker and billionaire John Malone, continues to outperform with a strong roster of assets. The biggest boost to the company's most recent earnings report: perennial Fool favorite Sirius XM (NASDAQ: SIRI ) . One thing that can concern investors and analysts, though, is the ability for conglomerates to continue delivering value after successful runs...
...The most encouraging segment, by far, was Sirius XM. Regardless of whether Sirius investors were approving of its takeover or not, the company is performing at record levels. For the quarter, Sirius gained 453,000 subscribers to bring the total to a company record of 24.4 million. Jim Meyer was named the new CEO of the satellite radio provider.
Don't anyone get their knickers in a twist, the breakout traders will be out in full force next week.
Bears are losing out vs. bulls as pigs race to the finish line.