The Income Trader: A Covered Call Strategy
105 W. Monument Street
Baltimore, MD 21201
Friday, December 8, 2006
Urgent Email Number – #267
** Getting Sirius
Sirius Satellite Radio, Inc. (Nasdaq: SIRI) just reported lower-than-expected retail sales during the Christmas selling season.
That’s not good news… arguably, you could not get worse news in my opinion.
This is THE heart of the retail season – and if they can’t meet expectations now, the prospects for growth are not as strong as the company had indicated in the past.
We bought shares in Sirius for many reasons, including massive insider buying at higher levels.
I do not doubt that Sirius is a company that will survive and probably thrive. But I do not have faith that it will do well as a stock in the short term. And, our covered-call position expires in ten days.
I think Sirius will be LOWER in ten days since there is no positive catalyst to make it head higher. We could rewrite, but there are no attractive options out there which would serve our purpose of lowering our cost and providing us an acceptable return.
It is time to cover.
***Action to Take***
Buy back your Sirius Satellite December 2006 $5 calls (QXO-LA). You can buy them back for $0.05. Then, sell your shares in Sirius to close the position. This will result in a loss of about 12%.
