Unusual Options Activity: Marvell Technology (MRVL)

Semiconductor developer Marvell Technology (MRVL) is up 21 percent over the past year, beating the S&P 500 by about 6 points. One trader sees further outperformance in the months ahead.

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  • That’s based on the March $52.50 calls. With 95 days until expiration, 9,396 contracts traded compared to a prior open interest of 166, for a 57-fold rise in volume on the trade. The buyer of the calls paid $4.50 to make the bullish bet.

    Marvell recently traded for about $52, so shares would need to rise about 1 percent to move in-the-money.

    Shares are lower since making a 52-week high of $67.99 in June, but appear to have started trending higher in November.

    Like many chipmakers right now, Marvell isn’t performing too well operationally. Revenues are down 8 percent, and the company has struggled with earnings this year.

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  • However, it did turn a profit in its most recent quarter, with shares being valued at about 22 times earnings.

    Action to take: Shares likely have more upside ahead, even if it’s just a short-term seasonal rally in the coming weeks. Investors could potentially see low double-digit gains from shares. At current prices, Marvell also pays a 0.5 percent dividend.

    For traders, the March calls are well priced for being at-the-money, and could see high double-digit returns from a further rally in the coming months.


    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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