I am recommending we roll our Marvell Technology Group (MRVL) and Micron Technology (MU) puts out one week to buy ourselves some time.
The semiconductor sector has been hit by irrational concerns about chip shortages hurting revenue growth. Last time I checked, tight inventory meant higher selling prices and operating margins. So, I expect the sector to reverse higher soon.
MRVL Apr Week Four (4/23) 50 Put
Current Stock Price: $46.35
Net Debit: $1.64
Action:
- Buy to close the MRVL Apr Week Four (4/23) 50 Put for around $3.70
- Sell to open the MRVL Apr Week Five (4/30) 50 Put for around $3.70
- Set your initial credit limit at $0, but adjust as needed to roll today
New Net Debit: $1.64
Expiration: After the close on Friday, April 30
Potential Rate of Return: I am targeting breakeven for this position
MU Apr Week Four (4/23) 92.50 Put
Current Stock Price: $85.73
Cash in Hand: $2.35
Action:
- Buy to close the MU Apr Week Four (4/23) 92.50 Put for around $6.75
- Sell to open the MU Apr Week Five (4/30) 92.50 Put for around $6.95
- Set your initial credit limit at $0.20, but adjust as needed to roll today
New Cash in Hand: $2.55
Expiration: After the close on Friday, April 30
Potential Rate of Return: 2.8% in 44 days, or 23% annualized, if this option expires worthless