Bulls score in $MRVL

Bullish option traders made some big gains in Marvell Technology (MRVL) today on upside positions opened last Wednesday.

On May 13, Market Rebellion’s Unusual Option tracking systems showed that 2,000 Weekly $26 calls expiring this Friday, May 22, were bought from $0.60 to $0.63 with shares at $22.58. This was clearly a new position, as open interest in the strike was just 756 contracts before that session began.

Those calls traded for as much as $3.00 today, 5 times their initial purchase price. The stock rose 28.52% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

MRVL rose to close higher on the day by 5.81% at $28.96 after making a new multi-year high of $29.17 earlier in the session. The chip company has risen along with its peers amid social distancing and the “stay-at-home” economy.