Marvell Technology (MRVL) 11/3/09 PriceWatch Alert Up To 21.33% Downside Protection

Posted: Tuesday, November 03, 2009 8:31 AM EDT
By: Market Intelligence Center Staff

Marvell Technology (NasdaqNM: MRVL) closed yesterday at $13.83. So far the stock has hit a 52-week low of $4.48 and 52-week high of $16.72. Marvell Technology stock has been showing support around 13.30 and resistance in the 14.24 range. Technical indicators for the stock are Bearish 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 12 covered call (ULJ EL) for a net debit in the $10.88 area. That is also the break even stock price for this trade. This covered call has a 200 day duration, provides 21.33% downside protection and a 10.29% assigned return rate for an 18.79% 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 5 Call (OZL AA) and selling the May '10 12 call (ULJ EL) for a $6.45 debit. The trade has a 200 day life and would provide 17.21% downside protection and an 8.53% assigned return rate for a 16.00% annualized return rate (for comparison purposes only). Marvell Technology does not pay dividends at this time. [ATU-Seven Summits Research]