Marvell Technology Group Ltd. (MRVL) Bulls Active Despite Sector Swoon

Marvell Technology Group Ltd. (MRVL) traders are buying April calls

by Griffin Kruse

Published on Mar 25, 2015 at 2:02 PM
Updated on Apr 20, 2015 at 5:32 PM

Semiconductor firm Marvell Technology Group Ltd. (NASDAQ:MRVL) is following its sector peers lower, down roughly 3.5% this afternoon to reach $14.93. Prior to today, the shares of MRVL were already sliding, and are now down 11% from their Feb. 20 two-year high of $16.78. Despite this negative price action, call activity in the options pits has been ramping up, with some speculators apparently viewing the dip as an opportune time to go long.

Calls have exchanged hands at three times the average rate today, and are outpacing puts by an over 4-to-1 ratio. Possible buy-to-open activity has been detected at the April 14.50 and April 16 calls, which are today's two most active contracts by far. By purchasing these calls, traders expect the security to edge north (or continue moving north) of the respective strikes by the close on Friday, April 17, when front-month options expire.

This spate of call activity echoes recent sentiment in the options pits, as MRVL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 78.46 ranks higher than 98% of all equivalent readings taken over the past year. Additionally, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.21 sits in the 17th percentile of its annual range, showing that short-term speculators have rarely been more call-heavy over the past 12 months.

Looking elsewhere, the brokerage bunch is skeptically skewed toward Marvell Technology Group Ltd. (NASDAQ:MRVL), as 48% of covering analysts rate the stock a "buy" or better, with the remaining 52% doling out "hold" or worse recommendations. What's more, MRVL's consensus 12-month price target of $16.83 is a chip-shot away from current trading levels.

Daily Chart of MRVL Since September 2014

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