Marvell Technology (MRVL) 12/4/09 PriceWatch Alert Targets 17.54% Downside Protection

Posted: Friday, December 04, 2009 8:29 AM EDT
By: Market Intelligence Center Staff

Marvell Technology (NasdaqNM: MRVL) closed yesterday at $16.53. So far the stock has hit a 52-week low of $5.30 and 52-week high of $16.85. Marvell Technology stock has been showing support around 16.30 and resistance in the 16.96 range. Technical indicators for the stock are Bullish and S&P gives MRVL a neutral 3 STAR (out of 5) hold rating. MRVL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 15 covered call (UVM EC) for a net debit in the $13.63 area. That is also the break even stock price for this trade. This covered call has a 169 day duration, provides 17.54% downside protection and a 10.05% assigned return rate for a 21.71% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the MRVL Jan '11 7.50 Call (OZL AU) and selling the May '10 15 call (UVM EC) for a $6.70 debit. The trade has a 169 day life and would provide 14.10% downside protection and an 11.94% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Marvell Technology does not pay dividends at this time. [FBB-Seven Summits Research]