By Mike Yamamoto of OptionMonster
NEW YORK -- A large trader is looking for Marvell Technologies (MRVL) to rally soon.
OptionMonster's tracking systems showed that 19,923 May 17 calls were bought for 12 cents in one print Thursday while a block of 6,657 May 16 calls was sold for 35 cents. Volume was above open interest in the 17 contracts but below it in the 16s, indicating that an existing long position was closed and rolled to the higher strike at triple the size.
Long calls lock in the price where a stock can be purchased, letting traders position for a rally at a fraction of the cost of buying shares. The contracts can generate significant leverage--especially when the size of a position is increased as much as it was in Thursday's roll -- but they can expire worthless if the stock stalls or pulls back.
Marvell's shares rose 0.06% to $15.85 Thursday. The stock has been shuffling between $15 and $16 for most of the year.
The semiconductor maker reports earnings on May 22, about a week after Thursday's long calls expire, so that trader is looking for an early move. Overall option volume was 17 times greater than average in the session, with calls accounting for a bullish 91% of the total.
Yamamoto has no positions in MRVL.