Bullish option positions opened this morning in Marvell Technology Inc (MRVL) are paying off already.
On Mar. 23, Market Rebellion’s Unusual Activity Service detected the purchase of 12,000 Weekly $43 calls, expiring this Friday, for $0.16 to $0.25 with shares at $41.44. Open interest in the strike before the trade occurred was just 1,069 contracts, showing that this was a new position.
Those calls traded for as much as $0.61 today, or more than 2 times their purchase prices. The stock rose 3.72% at the same time, underscoring how quickly options can far outperform their underlying shares.
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 last higher on the day by 6.77% to $42.88.
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