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Calls target nine-year highs in Sirius

Traders are looking for Sirius XM to reach its highest levels in nine years.

optionMONSTER's Heat Seeker detected the purchase of 5,000 June 4.50 in one print for the ask price of $0.05 less than 2 minutes before yesterday's close. This is clearly a new position, as open interest in the strike was only 290 contracts.

That follows the purchase of 25,500 March 3.50 calls reported on Dec. 22 on our InsideOptions Pro subscription service. Those contracts have more than tripled in value .

Long calls lock in the price where investors can buy a stock, which lets them position for a rally with limited capital. That can be safer than purchasing shares directly because only the cost of the options can be lost on a pullback. The calls can be sold anytime before they expire but will lose value if the stock falls. (See our Education section)

SIRI was up a penny yesterday to close at $3.90, just $0.03 off its 52-week high. The satellite-radio network broke through long-term resistance around $3.65 after reporting earnings on Feb. 5 and has been rising since. Yesterday's calls are targeting a level not seen since 2006.

Total option volume in the name exceeded 7,600 contracts yesterday, nearly 50 percent higher than its daily average for the last month. Only 23 puts traded in the session, a reflection of the bullish sentiment.


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