MRVL Analysis

Marvell Technology Group Ltd. (MRVL)

Update 5/30/2017: MRVL rose sharply after earnings were published, remaining high today despite an intra-day decline. I exited at 42.2% of maximum potential profit.

Shares showed a net rise of 3.2% over five days, or a +235% annual rate. The options position produced a +73.1% yield on debit for a +5,339% annual rate.

MRVL publishes earnings on Thursday after the closing bell.

I shall use the series of monthly options that trade for the last time 22 days hence, on June 16.

Implied volatility stands at 39%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

MRVL’s IV stands in the 49th percentile of its annual range and the 88th percentile of its most recent broad movement.

The price used for analysis was $16.97.

Premium: $1.16 Expire OTM  
MRVL-iron fly Strike Odds Delta
Long 20.00 92.5% 9
Break-even 18.16
Short 17.00 53.6% 51
Short 17.00 46.4% 49
Break-even 15.66
Long 14.50 85.9% 12

The premium is 42% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on MRVL as described above. I changed to the JUN series of options expiring June 16, when the earlier expiring weeklys proved to be too illiquid to support a trade. The stock at the time of entry was priced at $16.95.

By Tim Bovee, Portland, Oregon, May 25, 2017

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