Unusual Options Activity: Marvell Technology (MRVL)

Semiconductor manufacturer Marvell Technology (MRVL) has sold off in recent days, but is still up 75% over the past year, nearly triple the market’s return. One trader sees shares bouncing back in the coming months.

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  • That’s based on the July $72.50 calls. With 93 days until expiration, 12,122 contracts traded compared to a prior open interest of 434, for a 28-fold rise in volume on the trade. The buyer of the calls paid $5.20 to make the bullish bet.

    Marvell shares recently traded for about $68, so they would need to rise $4.50, or about 7%, for the option to move in-the-money. That’s still well off the stock’s 52-week high of $85.76, set back in March.

    Like many semiconductor companies, Marvell has been losing money over the past year. Revenues were also flat. Shares trade at 22 times earnings, about in-line with the overall market.

    However, as the company’s newer AI-enabled chips start to hit the market, shares can likely see a big push higher from here.

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  • Action to take: Investors may like shares here. Following the recent pullback, Marvell stock is at the 3-month support and could make a sustained move higher from here in the months ahead. Shares pay a small 0.3% dividend.

    For traders, the July calls are a bit aggressive in that they have just under three months to play out. But they could see mid-to-high double-digit returns on a jump higher in shares in the coming weeks.


    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 company mentioned in this article.

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