Results 1 to 4 of 4

Thread: Sirius Straddle Strategy!

  1. #1
    Sirius Roadkill is offline
    Mentor
    Sirius Roadkill's Avatar
    Joined: Feb 2009 Posts: 1,882

    Sirius Straddle Strategy!

    http://www.schaeffersresearch.com/co...44&single=true

    Option volume is heavier than usual today on both DryShips Inc. (DRYS) and Sirius XM Radio Inc. (SIRI). The drybulk shipping issue and the satellite radio company don't have a whole lot in common at first glance, but they do share a common thread today -- both stocks are seeing a flurry of activity in their longer-term options series, with speculators showing a distinct preference for Long-Term Equity AnticiPation Securities (LEAPS) on DRYS and SIRI.

    First up, call activity on DRYS has climbed to 1.22 times the norm, with more than 4,400 contracts changing hands so far. Most active is the security's January 2011 5-strike call, where 2,925 contracts have been exchanged -- about 93% at the ask price, revealing a bias toward buying activity. Implied volatility on this LEAPS strike has climbed by 4.4 percentage points at last check.

    On the charts, DRYS shares are holding close to breakeven at last check. The stock is trading below short-term resistance at its 10-day and 20-day moving averages, and the shares have also breached support at their 50-day trendline. DRYS is now testing support at the $4 level.

    As for SIRI, the stock was the subject of a straddle strategy earlier today. Specifically, the speculator purchased a block of 1,500 January 2012 1-strike calls, and simultaneously bought a matching amount of January 2012 1-strike puts. SIRI was trading squarely at $1 at the time these trades were executed, placing both options right at the money.

    The ultimate goal in this long-term straddle is for SIRI to make a drastic move higher or lower, so that the gains from the profitable option will offset the increased cost of entry on the spread. This particular straddle was opened for a net debit of $0.51, placing breakeven at $0.49 on the downside and $1.51 on the upside.

  2. #2
    sxminvestor is offline
    Quote Originally Posted by Sirius Roadkill View Post
    http://www.schaeffersresearch.com/co...44&single=true

    Option volume is heavier than usual today on both DryShips Inc. (DRYS) and Sirius XM Radio Inc. (SIRI). The drybulk shipping issue and the satellite radio company don't have a whole lot in common at first glance, but they do share a common thread today -- both stocks are seeing a flurry of activity in their longer-term options series, with speculators showing a distinct preference for Long-Term Equity AnticiPation Securities (LEAPS) on DRYS and SIRI.

    First up, call activity on DRYS has climbed to 1.22 times the norm, with more than 4,400 contracts changing hands so far. Most active is the security's January 2011 5-strike call, where 2,925 contracts have been exchanged -- about 93% at the ask price, revealing a bias toward buying activity. Implied volatility on this LEAPS strike has climbed by 4.4 percentage points at last check.

    On the charts, DRYS shares are holding close to breakeven at last check. The stock is trading below short-term resistance at its 10-day and 20-day moving averages, and the shares have also breached support at their 50-day trendline. DRYS is now testing support at the $4 level.

    As for SIRI, the stock was the subject of a straddle strategy earlier today. Specifically, the speculator purchased a block of 1,500 January 2012 1-strike calls, and simultaneously bought a matching amount of January 2012 1-strike puts. SIRI was trading squarely at $1 at the time these trades were executed, placing both options right at the money.

    The ultimate goal in this long-term straddle is for SIRI to make a drastic move higher or lower, so that the gains from the profitable option will offset the increased cost of entry on the spread. This particular straddle was opened for a net debit of $0.51, placing breakeven at $0.49 on the downside and $1.51 on the upside.
    Sounds like a good strategy to me.

  3. #3
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Indeed interesting, but the stock has to move to make it work, and something needs to drive that. Like calling another bond issue or something like that. SIRI needs to chip away at the debt. Refinancing at a lower rate and extending is not the answer. Don't get me wrong, it helps, but the ultimate is getting rid of it.

  4. #4
    Sirius Roadkill is offline
    Mentor
    Sirius Roadkill's Avatar
    Joined: Feb 2009 Posts: 1,882
    Quote Originally Posted by SiriuslyLong View Post
    Indeed interesting, but the stock has to move to make it work, and something needs to drive that. Like calling another bond issue or something like that. SIRI needs to chip away at the debt. Refinancing at a lower rate and extending is not the answer. Don't get me wrong, it helps, but the ultimate is getting rid of it.
    That's where the NOL's come in!

    More cash available to pay down debt and lower capex over next couple years.

    IMO, Stern signing or not-signing doesn't move the needle one iota on Share Price; neither does SatRad 2.0 (whatever the hell that is?) (see Skydock, IPhone App and other equally hyped innovations that didn't produce diddly-squat)

    Another thing that could move the SP? A tender offer by Liberty.

  5. Ad Fairy Senior Member

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •