Sirius XM Holdings Inc (NASDAQ: SIRI) has been gobbling up competitors in an effort to capitalize on podcasting trends. The added technology and the successful free streaming offer in May and June proved to be a success. On Thursday, option traders stepped up to buy a significant number of call option for an out-of-the-money strike price. The expectation is that the listlessness of SIRI may be coming to an end.
SIRI has worked hard to dominate the digital audio entertainment industry. The company has acquired Pandora, AdsWizz, Stitcher, Simplecast and an investment in SoundCloud. The company now offers a suite of technology products for podcasters. The company is looking to leverage its business to acquire talent and to add non-traditional “talk show” talent.
On Thursday, the option volume was over nearly four times the average. Of the 17,700 call contracts traded, 58% of the volume was filled at the ask, which is an indication of buying. The 18 DEC 20 $7 call had one trade that saw 6,397 contracts fill in one print for around $0.15.
Action to Take: The strike price traded, and the strike price provides a target and a timeframe for a trade. In this case, its over $7 by December’s expiration.
Speculators may want to consider buying the 18 DEC 20 $5 call option for $1.05 or less. A way to manage a trade like this is by rolling the option to a higher strike price when the option gains 50%. Rolling to a higher strike price provides a credit to reduce risk and eventually lock in profits.