Shares of semiconductor company Marvell Technology (MRVL) have lost over a quarter of their value in the past year. One trader sees a potential rebound ahead in the coming months.
That’s based on the September $42.50 calls. With 72 days until expiration, 18,092 contracts traded compared to a prior open interest of 154, for a 117-fold jump in volume on the trade. The buyer of the calls paid $4.85 to get in.
The buy comes as shares have hit a 52-week low under $42 per share, making the options an at-the-money trade. That’s off a 52-week high near $92 per share.
While shares have been declining, revenue is up 74 percent in the past year. That may slow down with a slowing economy, but shares will likely be a strong performer on days when the market rallies in coming weeks.
Action to take: Investors may like shares at today’s levels for the long haul. The company pays a modest 0.5 percent dividend. That’s not much for getting paid to wait for a market rebound. Investors should wait until a longer uptrend is about to go under way before looking to buy shares.
For traders, the options can likely be a strong performer in the coming weeks. Traders should look to buy the options on a down day for the stock, and look to flip for a quick mid-double-digit profit given current volatile market conditions.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.