Daily Stock Market Equity and Options Trading Commentary

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Thursday, June 18, 2009

Sirius XM App Available for iTunes: The Trade

The long awaited Sirius XM (SIRI) app has finally launched in iTunes (AAPL), as the picture below shows (click to enlarge).

This app has been long awaited and could mean positive things for Sirius. I do not know when the app first launched, but Sirius stock took off at about 12:30 PM Wednesday June 17, 2009 and continued to rally after the market closed.

I guess the big deal is that this is just the beginning for Sirius with these portable devices, such as the Apple (AAPL) iPhone. If it has success, I am sure we'll see similar apps for other phones like those of Palm (PALM), Blackberry (RIMM), and even the myTouch by HTC, which uses Google's (GOOG) Android Operating system. This is much cheaper for Sirius (as they don't need the actual radio like in vehicles), and if it is successful will add to their bottom line.

Some quick facts I can state about the app are: it does not include the Howard Stern channel (which people seem to be upset about), it's free with Premium SIRIUS or Premium XM Radio Online subscription (AKA costs $2.99/month to upgrade car radio to internet, or $12.95/month for internet radio without car radio), and they are giving a 7 day free trial (which is a great idea, in my opinion).

I never believed this would mean anything for Sirius, but the hype is real. I was just reading some tweets on Twitter and people are excited to download this application. It looks like this could be a very bullish sign for Sirius, which is why I will outline this option strategy I have been using to get my shares cheaper with a large upside. (Learn more about this strategy check out my option E-Books).

Sirius Strategy: Buy Sirius and sell the December $1 call option for $10 per contract (perhaps even higher depending on how high the stock gets on this news). Yes, this locks your shares up, but if you plan on holding the stock anyway, and would be happy with 333% gain ($1 - 30 cents) this doesn't seem to be a bad idea in my opinion. Let's say you bought in at market close June 17, 2009 for roughly 40 cents a shares and sold the rights to it for $1 come December for a dime a share. Your cost basis would drop to 30 cents a share (25% downside protection) but the stock has to more than double in less than a year in order for you to be called out. The current options market is factoring in a 39.9% chance that Sirius is at or above $1 by December, so chances are you'll keep the stock, but this means you can generate more revenue from it and write it out for another expiration when the time comes. Sphere: Related Content


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