Unusual Options Activity: Marvell Technology (MRVL)

Semiconductor designer Marvell Technology (MRVL) is up 40 percent in the past year, returning more than double the S&P 500. One trader sees shares trending higher in the next two weeks.

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  • That’s based on the November 3 $53 calls, With 14 days until expiration, 5,037 contracts traded compared to a prior open interest of 109, for a 46-fold rise in volume on the trade. The buyer of the calls paid $1.15 to make the bullish bet.

    Shares recently traded for about $51.50, so shares would need to rise about $1.50, or about 3 percent, for the option to move in-the-money.

    Over the past three months, shares have found support near the $51.50 range. If that support holds, shares could be poised for a moderate move higher in the coming weeks.

    Operationally, Marvell just hit profitability in the most recent quarter, and shares look like a reasonable value for the semiconductor space at 21 times forward earnings.

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  • Action to take: If the support line holds, shares could be on track for a jump higher. That would also play to a year-end seasonal rally. Marvell also pays a 0.5 percent dividend, but the real story here is the potential for a move higher.

    The November 3 calls have just 2 weeks to play out, so they’re relatively cheap. If the timing works out perfectly, the trade could deliver triple-digit gains. More conservative investors can go further out on the trade and use a higher strike price to potentially capture a bigger move in the weeks ahead.


    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.

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