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Marvell Technology Trader Looks for a Lackluster New Year

Is a MRVL skeptic opening a new spread -- or is a former bull giving up hope?

by 12/31/2012 11:23 AM
Stocks quoted in this article:

One spread player has low expectations for Marvell Technology Group Ltd. (NASDAQ:MRVL - 7.13), judging by a skeptically slanted call strategy that crossed the tape earlier today. Specifically, a block of 3,128 contracts traded near the bid price of $0.55 on MRVL's May 8 call, suggesting they were sold, while a matching block changed hands at the ask price of $0.12 on the May 11 call, implying they were purchased.

Open interest at both strikes is currently outnumbering today's volume, so it's unclear whether these calls are being opened or liquidated. Implied volatility rose with each transaction, raising the prospect that this is a freshly initiated bear call spread -- in other words, a bet that MRVL will remain at or below $8 through May expiration.

On the other hand, Trade-Alert indicates these might be closing transactions, which would suggest a long call spread is being unwound. If so, this would reflect a formerly bullish bettor giving up hope on MRVL's ability to stage an intermediate-term rally.

It's been a rough couple of days for MRVL, with the stock taking a dive last week after being dealt a crushing blow in a patent case. The shares have shed roughly half of their value year-to-date, and MRVL is down another 0.5% today.


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