Marvell Sees Millions of Dollars in Option Block Trades Amid Tariff Uncertainty

$Marvell Technology(MRVL)$   saw a multi-leg block trade of put options that had a bullish and a bearish tilt Tuesday amid mounting uncertainty fueled by President Donald Trump's tariff policies that investors fear could hurt the global economy. 

At 9:41:14 a.m., an active seller collected a $5.62 million premium for issuing put options that give the buyer the right to sell 1.05 million Marvell shares at $45 by Sept. 19. That out-of-the-money put option will be profitable for the seller should the stock continue to trade above that level over the next 164 days, allowing the contracts to expire worthless. 

That bullish block trade was posted at the same time that a bearish transaction was recorded. An active buyer paid a $5.16 million premium for put options that gives the holder the right to sell 1.05 million Marvell shares at $55 by May 2. 

Traders and investors are hedging their exposure to U.S. equities amid mounting tariff uncertainty that has triggered a wider market sell-off, pushing the Nasdaq to a bear market last week. 

Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said the tariffs and U.S. restrictions on semiconductor end-products and components and possible retaliation by other countries could heighten uncertainty, especially for companies that have seen their valuations climb. Companies with margin buffers may be in the best position to weather that uncertainty, they said in a note last week.

For its fiscal fourth quarter that ended on Feb. 1, Marvell reported that its gross profit margin more than doubled to 50.5%, from 23% in the previous three months, amid surging demand driven by the artificial intelligence (AI) boom. 

The multi-leg transaction for Marvell put options was posted just as the shares were climbing as much as 10%, buoyed by the company's announcement late Monday that it has agreed to sell its automotive ethernet business to Infineon Technologies in a $2.5 billion all-cash deal. Marvell's stock traded at $52.27, up 2.5% at 1:57 p.m. in New York. 

"We believe this transaction makes sense (especially given the healthy valuation premium) and aligns with Marvell's strategic focus on AI and accelerated computing, while reducing its investment in certain areas of its multi-markets portfolio,” JPMorgan analysts including Harlan Sur wrote in a note to clients Tuesday. 

Automotive/industrial accounted for about 5% of the company's fourth quarter revenue. Data center represented the biggest chunk, delivering 75% of its revenue, up from 54% a year ago. 

The same team of JPMorgan analysts wrote in a separate note Monday that they expect a potential 10% downside for semiconductor stocks as they warned of a likely “profound impact” on demand for electronic goods, IT infrastructure, industrial and automotive from tariffs. 

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