Marvell bulls cash in their chips

Mrvl526

Option traders reaped large profits in semiconductor maker Marvell Technology today thanks to strong quarterly results.

On April 6, Investitute’s tracking systems detected the purchase of 5,000 August $15 calls in one print for $1.10 with shares at $15.01. This was clearly a new position, as open interest in the strike was only 1,149 contracts before the trade occurred.

Today those calls traded for $2.77, a gain of more than 150 percent. The stock rose about 17.3 percent in the same period, underscoring the kind of leverage that can be achieved through options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MRVL popped 4.31 percent to $17.67 today. The chip manufacturer surpassed earnings and revenue expectations after the market closed yesterday.

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Mike Yamamoto

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