Put Volume Rips Higher as Marvell Technology Group Ltd. (MRVL) Slides

Marvell Technology Group Ltd. (NASDAQ:MRVL) puts are trading at 14 times the average intraday pace

by Karee Venema

Published on Apr 1, 2016 at 10:33 AM
Updated on Jun 24, 2020 at 10:16 AM

Marvell Technology Group Ltd. (NASDAQ:MRVL) is struggling today, with the semiconductor stock off 3.9% to $9.90, after the firm said it would delay filing its annual report and projected "significantly lower" sales for 2016. Against this backdrop, put volume has jumped to 14 times the average expected rate, although not all of the early action is of the traditional bearish variety.

Specifically, the stock's April 9.50 put has seen the most action so far, and it looks as if traders may be selling to open the options. In other words, they expect $9.50 to serve as a foothold for MRVL through the close on Friday, April 15 -- when front-month options expire.

Meanwhile, it appears as if more traditional put players are buying to open MRVL's weekly 4/1 10-strike put. If this is the case, they expect the stock to continue to slide through the remainder of today's trading, with the weekly options set to expire at tonight's close.

Widening the scope reveals today's accelerated put activity is just more of the same in MRVL's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.80 rests in the 96th annual percentile. In other words, puts have been bought to open over calls at a near-annual-high clip.

This skepticism is seen elsewhere on the Street, as well, with 15 of 19 covering analysts maintaining a "hold" or worse rating on the shares. Plus, the consensus 12-month price target of $10.39 was within a stone's throw to last night's close at $10.31.

However, heading into today's session, shares of Marvell Technology Group Ltd. (NASDAQ:MRVL) had been rising steadily since hitting a three-year low of $7.40 in late February thanks to some M&A buzz. Today's slide has the equity back in single-digit territory for the first time since March 10, though, and back below its 200-day moving average -- a trendline that helped support MRVL through the latter half of March.

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