Long-term trade bets on Marvell
Marvell Technology gapped higher Friday after its earnings report, and one trader is looking for more gains in the long term.
optionMONSTER's Heat Seeker system detected the purchase of 3,500 January 2016 15 calls for $1.67 and $1.68. This is clearly a new position, as the volume was well above the strike's previous open interest of 1,511 contracts.
These long calls lock in the price where the stock can be purchased through early 2016 no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $15. (See our Education section)
MRVL gained 5.19 percent to $13.99 on Friday. The chip maker had been range-bound since the beginning of the month and closed at $13.30 going into its quarterly results Thursday afternoon.
Total option volume in the name was just shy of 22,000, about 8 times its daily average for the last month. Overall calls outnumber puts by 5 to 1.
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