Marvell Technology Group Ltd. (MRVL) Bulls Target Multi-Year Highs

Call buyers have set their sights on Marvell Technology Group Ltd. (MRVL)

by Karee Venema

Published on Mar 6, 2015 at 11:47 AM
Updated on Apr 20, 2015 at 5:32 PM

Call buyers have been flooding Marvell Technology Group Ltd.'s (NASDAQ:MRVL) options pits in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day call/put volume ratio of 6.60 ranks in the 71st annual percentile. In other words, calls have been bought to open over puts at a faster-than-usual clip.

Echoing this call-skewed bias is MRVL's Schaeffer's put/call open interest ratio (SOIR) of 0.18. Not only does this show that call open interest outweighs put open interest by a more than 5-to-1 ratio among options set to expire in three months or less, but it ranks lower than 91% of similar readings taken in the past year. Simply stated, short-term speculators have rarely been as call-heavy as they are now toward the security.

It's a similar backdrop in today's trading, with calls crossing the tape at 1.5 times what's typically seen at this point in the day, and outpacing puts by a more than 17-to-1 margin. Receiving notable attention is the stock's March 17 call, where it appears a number of positions are being bought to open. By initiating the long calls, traders expect MRVL to topple $17 -- a feat not accomplished in four years -- by the close on Friday, March 20, when front-month options expire.

This upbeat outlook isn't too surprising, given MRVL's recent flexing of technical muscle. Since hitting an annual low of $11.65 in mid-October, the equity has rallied 42% -- and hit a multi-year peak in February -- to trade at $16.53. What's more, the brokerage bunch is beginning to share in this optimism. Specifically, Susquehanna this morning raised its price target on Marvell Technology Group Ltd. (NASDAQ:MRVL) by $6 to $20, and upped its rating to "positive" from "neutral," expressing confidence in the company's ability to find a strategic alternative for its handset division.


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