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Marvell Technology Group Ltd. (MRVL) Traders Bet On a Breakout

Marvell Technology Group Ltd.'s November 16 call was in focus on Thursday

by 6/6/2014 10:39 AM
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Option Brief: Marvell Technology Group Ltd. (NASDAQ:MRVL) saw overall option volume accelerate to more than two times the typical pace on Thursday, and calls once again emerged as the contracts of choice. By the numbers, 9,293 calls changed hands on the day, compared to 6,212 puts. Although short-term options were in demand -- as evidenced by the equity's rising 30-day at-the-money implied volatility (IV) -- a longer-term call saw the loftiest rise in open interest overnight.

Specifically, the stock's November 15 call had 1,696 contracts on the tape at the close -- nearly all of which had switched hands on the ask side, pointing to buyer-driven activity. Meanwhile, IV edged higher, and open interest added 1,630 positions overnight, making it safe to assume that a fresh batch of bullish bets was initiated.

The in-the-money calls were purchased for a volume-weighted average price (VWAP) of $1.30, making at-expiration breakeven $16.30 (strike plus VWAP). Gains are theoretically unlimited with each notch above this mark MRVL is sitting at the close on Friday, Nov. 21, which is when the options expire. Should the stock close south of the strike price at expiration, the most the speculators stand to lose is the initial premium paid.

On the charts, Marvell Technology Group Ltd. (NASDAQ:MRVL) has been a long-term outperformer, with the shares up roughly 43% year-over-year. More recently, however, the equity has encountered a stiff layer of resistance near $16, and has only enjoyed one weekly win north of this mark in 2014. In today's session, the stock is following in the bullish footsteps of the broader equities market, up 0.7% at last check to trade at $15.32.

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