Options Brief: Marvell Technology (MRVL)

MRVL – Marvell Technology Group Ltd. – Bullish and bearish options trading strategies were initiated on the semiconductor maker this afternoon with shares of the underlying stock up more than 1.6% at $19.25 as of 2:40 pm (ET). Optimists purchased call options in the June and July contracts to position for continued appreciation in Marvell’s share price. Investors picked up approximately 2,500 now in-the-money calls at the June $19 strike for an average premium of $0.34 apiece. Call buyers at this strike price are positioned to make money if MRVL shares rally above the average breakeven price of $19.34 by expiration on Friday. Buying interest spread to the higher July $20 strike where 1,100 call options were coveted at an average premium of $0.52 per contract. Investors long the calls profit only if shares of the underlying stock jump 6.6% to surpass the average breakeven price of $20.52 by July expiration. In contrast to the plain-vanilla call buying action, one cautious individual purchased a debit put spread, which yields maximum benefit to the responsible party if Marvell’s shares cool off ahead of expiration next month. The put player purchased 5,000 lots at the July $19 strike for a premium of $0.86 apiece, and sold the same number of puts at the lower July $18 strike for a premium of $0.46 each. The net cost of the spread amounts to $0.40 per contract. Thus, the trader is prepared to amass maximum potential profits of $0.60 per contract should shares of the semiconductor company decline 6.5% from the current price of $19.25 to trade at or below $18.00 by expiration day in July.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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