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