Calls rack up $MRVL profits

Option traders have doubled their money on upside positions in Marvell Technology.

On March 21, Investitute’s market scanners cited the purchase of 4,750 18April $20.50 calls for $0.63 to $0.71 above open interest of 318 contracts with shares at $20.31. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.30 today, twice their initial purchase price. The stock rose 6.94% in the same time frame, underscoring how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Investitute in the last three weeks.

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 was up 1.26% to $21.71 today. The chip maker has rallied more than 50% since last Christmas.