An investor is rolling a large position forward in Marvell
Technology ahead of the company's earnings report after the market
Some 20,000 June 16 calls were sold for $0.09 and $0.10 against
existing open interest. An equal number of July 16 calls were
purchased for $0.20 to $0.22, resulting in a net cost of about
While call rolls are usually bullish, today's activity is less
clearly so. If the investor expected a pop on the earnings report,
it would have made more sense simply to hold the June contracts.
But the options will lose value quickly if the semiconductor stock
doesn't rally immediately. That would increase the cost of doing
the roll later because it would mean less income from the sale.
Therefore, it appears that today's transaction reflects a lukewarm
expectation for today's report. The trader is still positioned to
profit from a good number but has essentially hedged the risk and
bought more time for MRVL to climb.
The stock is up more than 1 percent to $14.33 but has lost 35
percent of its value since mid-January. Much of the drop occurred
on March 4 after management warned that demand from cell-phone
makers and storage companies was shrinking.
MRVL has been trying to cling to the key $14 level, which has
provided support and resistance at various times in the last three
years. Some traders may expect the stock to hold this price even if
quarterly results stay weak before eventually rebounding.
Overall option volume in the name is more than triple the daily
average today, with calls outnumbering puts by 9 to 1.
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.
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