Friday, December 29, 2006

The SatRad Trader: Short Covering

Both SIRI and XMSR have been profitable short positions for 2006. Eventually, the shorts will have to cover, but when will it all begin? Will it be at CES when new product announcements and subscriber additions take center stage, or at the Auto show when new partnerships are disclosed? I'm not sure what the catalyst will be, but for those who were expecting a short covering rally this week, you will just have to wait. "IRS-sensitive" investors are likely to close out their profitable trades in early 2007 rather than in late 2006. By delaying by just one trading day, they are able to defer the payment of taxes on these profits for a year.