Originally Posted by
Faulkner_SA
Sorry but it doesn't have to close on $3.50. It was more likely to close below, and considering the opening of the put position was placed at 3 cents it should be expected the close falls within 3.47 and 3.5.
This isn't a "they are...." thing. Options are sold hedged, almost all the time. Calls are sold and the stock bought, and puts are sold and the stock shorted against, or they are opened against existing positions.
Thus the weight comes on the side of the long holder. Look at all options going into expiration as LONG ONLY, thus there is reverse pressure from option holders closing positions on or around expiration.
Thus those who are LONG calls will cause selling pressure and those who are LONG puts will cause buying pressure.
Yeah they may have offsetting positions on either end but there should be enough activity from each camp to push the price towards the strike, assuming it is already close and within the tradeable range.
Next large position January. 60K puts at 3.50, 96k calls, and then 100K calls at $4. 50k at $4.50
Two scenarios... close at or around $3.50 on no news, or close at or around $4 on good news between now and then. Anywhere in between is fair game though I don't expect over $4 close or under $3.50 close in Jan.
The $2 puts at 158K open position can be ignored. Those were sold to fund a large put purchase last year that didn't pan out for the buyer. It is likely they sold the $2 puts to fund the risky play as SIRI would have a very very hard time getting under the $2 mark again without major calamity.