Marvell calls look for quick rally

optionMONSTER

A large trader is looking for Marvell Technologies to rally soon.

optionMONSTER's Heat Seeker system showed that 19,923 May 17 calls were bought for $0.12 in one print yesterday while a block of 6,657 May 16 calls was sold for $0.35. Volume was above open interest in the 17 contracts but below it in the 16s, indicating that an existing long position was closed and rolled to the higher strike at triple the size.

Long calls lock in the price where a stock can be purchased, letting traders position for a rally at a fraction of the cost of buying shares. The contracts can generate significant leverage--especially when the size of a position is increased as much as it was in yesterday's roll--but they can expire worthless if the stock stalls or pulls back. (See our Education section)

MRVL rose 0.06 percent to $15.85 yesterday. Shares have been shuffling between $15 and $16 for most of the year.

The semiconductor maker reports earnings on May 22, about a week after yesterday's long calls expire, so that trader is clearly looking for an early move. Overall option volume was 17 times greater than average in the session, with calls accounting for a bullish 91 percent of the total.

(A version of this post appeared on InsideOptions Pro yesterday.)

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