Daily Stock Market Equity and Options Trading Commentary

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Tuesday, May 12, 2009

My Sirius Gamble

On Monday I bought 25,000 shares of SIRI and wrote out the September $1 for $10 per contract (10 cents a share). My cost per share is 31 cents. Siri is about 35% off of its high reached about 2 weeks ago. I didn't go to Vegas with my friends last weekend, so I figured this was my gamble for the year.

My reason for speculating with Sirius is I believe it may be ready to breakout again, as it looks like there is a falling wedge forming. As you can see major resistance comes in at around 38 cents, therefore I believe we'll get to 38 cents before we break out again. If you can see from the first falling wedge, SIRI was setting lower lows and lower highs, forming a falling wedge (a bullish pattern).

However SIRI held above 38 cents for almost a week before it broke out. If SIRI breaks below 38 cents (and stays below) I would take it as a bearish sign. However if it can hold resistance at 38 cents I think it is due for another breakout. The overall picture on SIRI is bearish, including the MACD and very light up volume. SIRI does not have significant short interest, therefore if the uptick rule is reinstated anytime soon it will not help too much. I guess time will tell how SIRI will hold up at $.38.

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