Why bears are buying Marvell puts

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Marvell Technology is pulling back from its highest price in almost four years, and the bears are positioning for a selloff.

MRVL Chart optionMONSTER's Depth Charge tracking system detected the purchase of more than 35,000 May 21 puts yesterday, most of which priced for $0.55 to $0.70. Volume was more than seven times previous open interest in the strike.

MRVL rose 0.23 percent to $21.81 yesterday. The semiconductor stock has been edging lower since reaching $22.87 last week, its highest price since a bearish gap in June 2006. Some chart watchers may expect the shares to encounter resistance at this level.

The company reported better-than-expected sales and profit on March 4, though management spoke cautiously about the strength of the economic recovery.

MRVL must fall at least 7 percent by expiration for the puts bought Thursday to turn a profit.

Overall options volume in the stock was eight times greater than average, with puts accounting for 91 percent of the activity.

(Chart courtesy of tradeMONSTER)



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This article appears in: Investing , Options

Referenced Stocks: MRVL

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