Trade positions for Marvell to drop

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Marvell Technology ripped through its 200-day moving average yesterday but saw bearish the option action.

MRVL The biggest trade resulted from a huge put spread that will profit if the semiconductor maker reverses back to the downside.

The trader bought about 35,000 February 18 puts for $1.45 and $1.50 and sold an equal number of February 15 puts for $0.53. It resulted in a cost of about $1 and will earn a maximum profit of about 200 percent if MRVL falls to $15 or lower on expiration.

The shares rallied 6.8 percent to $18.70 yesterday. It's up 25 percent since its last earnings report on Aug. 19 when results missed forecasts, but the stock gapped higher after management announced a $500 million share buyback.

The gains in MRVL came amid a session that semiconductor stocks including Intel, Broadcom, and STMicroelectronics outperformed both the broader market and technology in particular. That marks a contrast from recent months when chipmakers have lagged.

Overall options volume in MRVL was 14 times greater than average yesterday. Puts outnumbered calls by 3 to 1.

(Chart courtesy of tradeMONSTER)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: BRCM , INTC , MRVL , STM

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