I am investing in SIRI as a long term play. Still, because I follow them so closely, they were an obvious target for my first attempt at options trading. The stock was as low as it is likely to go (back at $5.26 now on 2/17/2006).

I’m assuming investors will flock back to this stock as it gets closer to profitability. I’m assuming investors will move into SIRI (away from XM) as SIRI’s subscriber additions and operating costs numbers continue to beat XM’s. Also from a hunch side, I’m recognizing that this stock has always fallen in the early year and always risen in the Spring and late Summer. All of these things made me believe that the stock could go to at least $7 by September. That was the trade.

But with all the bad news (I blogged about some and the Q4 report had a little more), it’s looking like investors may avoid this stock longer. Still, assuming that the stock is reaching its low, some in-the-money calls can’t seem like a bad idea. Depending on what strike price I buy the options at, I could break even at as little as $6. With a stock that trades with so much volatility on the news, all I would need is one good news item, one good quarter, to turn a profit. At ~$5 per share, I think there is a huge opportunity to trade this stock.

I’d be interested in what kind of options plays you’re looking at right now. What do you think of YHOO?

I have just one question

Why are you looking to accumulate a stock that is selling off?

It may take a year for this thing to rally- if it does. your options will expire worthless.