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Upside momentum trade in Marvell

David Russell (david.russell@optionmonster.com)

The bulls are targeting chip maker Marvell Technology.

optionMONSTER's trade scanners detected unusual activity in the July 12 calls on Friday, with early buyers paying $0.19 for a block of 3,000 contracts. Volume would climb to 6,700 by the end of the session, more than 4 times the strike's previous open interest and clearly indicating new activity.

These long calls cheaply lock in the price where a stock can be bought, limiting capital at risk and potentially generating significant leverage from even modest appreciation in the share price. Their premiums rose as the buyers piled in, ending the day at $0.30. (See our Education section)

MRVL rose 4.46 percent to $11.24. It had pulled back to its 50-day moving average in the previous week, and momentum traders jumped in.

The Weekly 10.50 calls expiring this Friday were even more active, with turnover close to 8,800 contracts. Their premiums more than doubled, from $0.40 to $0.87.

Overall option volume in the name was quadruple its daily average in the session. Calls accounted for more than 80 percent of the total.

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

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