Option Bulls Burned by Marvell Technology Group Ltd. (MRVL) Guidance

Marvell Technology Group Ltd. (MRVL) options are flying off the shelves today

Jun 10, 2016 at 10:49 AM
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Marvell Technology Group Ltd. (NASDAQ:MRVL) is spilling blood this morning, after the chipmaker offered up downbeat sales guidance for the first quarter and delayed the filing of its 10-Q due to an internal accounting probe. At last check, the stock has dropped 3.4% at $9.85, while options volume is spiking to seven times the usual intraday level.

By the numbers, more than 5,100 call options have traded versus roughly 1,200 puts. This is par for the course, considering, MRVL's 50-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at a top-heavy 9.45.

Echoing this preference for calls over puts is MRVL's Schaeffer's put/call open interest ratio (SOIR) of 0.16. Not only does this ratio indicate calls outstrip puts by a more than 6-to-1 margin among options expiring in the next three months, but it also ranks just 5 percentage points from a 12-month low. Suffice it to say, option bulls could be feeling the heat with today's swing south.

Turning elsewhere, short sellers have been abandoning ship. Short interest on MRVL plummeted 36.5% during the last two reporting periods, and now accounts for a slim 1.4% of the stock's float. On the other hand, the brokerage crowd remains skeptical, with 13 of 18 analysts doling out "hold" or worse recommendations.

Technically speaking, Marvell Technology Group Ltd. (NASDAQ:MRVL) has had a standout 2016, despite today's setback. Specifically, the stock is up 11.7% year-to-date. More recently, though, the shares have been consolidating in the $10 neighborhood for more than a month -- unable to maintain a double-digit perch.

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