MRVL Analysis

Marvell Technology Group Ltd. (MRVL)

Update 8/28/2017: MRVL beat earnings expectations, coming in at $0.31 against the $0.28 consensus forecast. Shares rose more than $1 after publication and then fell less than a quarter of the rise before beginning another upward move.

The Earnings Surprise Predictor from Zacks Investment Research gave no indication that a surprise was looming.

Shares rose by 7.0% over over four days, or a +636% annual rate. The options position produced a 46.9% loss for a -1,766% annual rate.

MRVL publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time eight days hence, on Sept. 1.

Implied volatility stands at 42%, which is 3.4 times the VIX, a measure of the volatility of the S&P 500 index.

MRVL’s IV stands in the 85th percentile of its annual range and the 88th percentile of its most recent broad movement.

The price used for analysis was $15.93.

Premium: $1.00 Expire OTM  
MRVL-iron fly Strike Odds Delta
Long 18.00 91.6% 10
Break-even 17.00 ~78.0% ~25
Short 16.00 53.5% 50
Short 16.00 46.6% 50
Break-even 15.00 ~72.0% ~25
Long 14.00 89.7% 9

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 1:1.

The expected move is $0.88, within the $1.00 break-even width.

Decision for My Account

I have entered an order on MRVL as described above. The stock at the time of entry was priced at $15.92.

By Tim Bovee, Portland, Oregon, Aug. 24, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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