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How the Bulls Are Playing Marvell: OptionMonster

Semiconductors have been coming to life, yesterday traders turned bullish on Marvell Technology (MRVL - Get Report).

OptionMonster's scanning systems detected the purchase of some 20,000 February 14 calls in volume far above the strike's previous open interest of just 1,965 contracts, clearly showing that new positions were established. The initial blocks priced for $0.64, though premiums at one point traded as high as $1.01.

These calls lock in the price where a stock can be purchased, allowing investors to benefit from a rally without the cost and risk of owning shares. They can also generate significant leverage if there is a decent move in the right direction.

Marvell shares rose 2.53 percent to $13.76 yesterday and are up 90 percent so far this year amid strong quarterly results. The stock pulled back in the last month but is now bouncing above its 50-day moving average, which could make some chart watchers expect the uptrend to continue.

Overall option volume was 2 times greater than average in the name, with calls accounting for a bullish 79 percent of the total.

--By David Russell, who has no positions in MRVL.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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