Bears collect their chips in $MRVL

Bearish option traders collected their chips in Marvell Technology (MRVL) today on downside positions opened last Thursday and Friday.

Market Rebellion’s Unusual Option Activity Service flagged bearish option activity in the name on two consecutive sessions last week in contracts that expire today, Aug. 14.

–On Aug. 6, 3,700 Weekly $36 puts were purchased for $0.49 to $0.70 above open interest of 151 contracts with shares at $36.91.
–Then on Aug. 7, 3,300 Weekly $36.50 puts were purchased for $0.92 to $1.32 below open interest of 389 contracts with shares at $35.62.

Those puts traded for as much as $2.49 and $2.93 today, at least 3.5 and 2 times their respective purchase prices. The stock fell as much as 5.53% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

MRVL fell to close lower on the day by 3.26% at $33.57. The chip company is scheduled to report its Q2 earnings on Aug. 27 after the close.