$MRVL daily pick: sell Nov 27 $145 put (buy-side) after the Lumentum deal selloff
$MRVL: I'm selling the Nov 27 $145 put on @MarvellTech after the stock lost 32% in four sessions on the $115B Lumentum deal.
Live at 12:19pm ET ($170.58):
7% under the 200-day
Credit $3.70 for about 2.6% in 24 days (~39% annualized)
Breakeven $141.30, 17% below today
About 23x fiscal 2028 EPS estimates
I think the dilution fear is mostly priced in because Marvell gave back about a third of its value in a week while the AI connectivity business underneath didn't change.
If it gets put to me I own Marvell at $141, which is still up 56% from a year ago. I've made worse trades before lunch.
Not financial advice
Why a put and not shares? The deal is all stock (4.5 Marvell shares per Lumentum share) and BofA says it adds about 50% to the share count with closing not expected until the first half of 2028. That's a long overhang. I'd rather collect $370 and let it come to me under $145.
Don't have $14,500 sitting in cash? Defined-risk version: sell the $145 put and buy the Nov 27 $130 put for about $2.11 credit. Max risk $1,289 and breakeven $142.89. You lose the full $1,289 if MRVL is under $130 on Nov 27.
Bear case: BofA cut it to Neutral last night with its target slashed from $400 to $225. TD Cowen downgraded too. The chip index is down about 19% in a month. If that keeps going my strike is in play. That's why it sits 15% below today and under the $162.90 July low.
What I'd watch: whether the stock holds that July low and whether more holders push back on the deal. Marvell reports Dec 1 so this put expires before the print. Even BofA's cut target of $225 sits about 32% above today.
Sources: CNBC: BofA downgrades Marvell on Lumentum deal · Investing.com: BofA downgrade, 50% dilution, 1H 2028 close · Investing.com: TD Cowen and BofA downgrade Marvell · Fox Business: $115B all-stock deal, 4.5 shares per LITE share · Motley Fool: Marvell -13% Nov 2 on the deal · Barron's: Marvell and Lumentum lose $91B in value
Not financial advice. For informational and educational purposes only.
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