Options Insight: How to Play Marvell Technology

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Jan. 13 (Bloomberg) -- MKM Holdings Derivatives Strategist Jim Strugger his options play for Marvell Technology on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Analyst who so that covers semiconductors recently upgraded , or initiated, i should say, more technology.

This has to do with the china connection, kinney walker through that -- can you walk us through that?

4g expects to ramp in china for the sharply 2014. this is at the heart of that.

The strategy on this is interesting, because it is just a straight up by the call, which is not something i hear too often from the guys i talked to.

It may be a $17 call?

Why straight up buuy,y, why not a risk aversion strategy?

Not every option strategy needs to have four legs, and we are talking about implied volatility being pretty low.

Seeing oppretty significant opportunity.

A nonlinear payoff.

In a case like this, when we are seeing significant rollup from china mobile of 4g lte intro thousand 14 to buy a stock that significantly -- in 2014 in a stock that stand to benefit significantly, we do not see any downside.

That is not far above where it is right now.

Just in time for it to get there.

That is an option series without a bi -- with about a 25 delta to it.

Delta means think of it as a 25% chance that the option ends up in the money when the stock gets to $17, that will approach 100. it is also an indication of the option knowledge the that is embedded.

Owning the 17 calls, moving the shop up -- when the stock moved up sharply will give you the investment.

Is they are the risk that there are going to be other competitors in the chinese market who are maybe going to wins above the constructs from chinese mobile?

-- the contracts from chinese mobile?

There are about a million 4g handsets.

The delta is really going to come out of china mobile, and marbella is situated right there.

There will be competition, but we think that we will be one of the winners.

Are there any other catalysts?

What we are seeing our design wins -- are design wins.

To include an integrated chip , through qualcomm.

What we expected exposure through these next few earnings.

People believe it is the sustainability of growth in china 4g, that is what we are playing for.

Thank you.

We will be watching to see how

This text has been automatically generated. It may not be 100% accurate.


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