Marvell Technology Group Ltd (NASDAQ:MRVL) is on its way into merging with Cavium Inc (NASDAQ:CAVM). China’s State Administration for Market Regulation has confirmed the merger expected to close later in July subject to customary closing conditions. This comes at a time when buyouts of smaller companies by bigger ones are becoming a trend perhaps in an effort to tap into their creativity and potential for growth. Enhanced technology is somewhat becoming a basic need. In addition, investors are turning themselves towards companies, which have bigger rewards in terms of shares.
Marvell Technology’s merger sparked gains
The merger between Marvell and Cavium was not in vain because it yielded substantial gains. Apparently, the investors had remained hopeful about the approval of the merger and no wonder they went ahead to buy the $20 calls, expiring on August 17. The calls sold for nearly twice their purchase price even as the stock rose 9.5%. It is obvious that anyone wanting to trade in stock must ensure the volume is healthy lest they are caught up in a stuck position. Volumes are a key guideline in buying or selling securities, thus active shares result in higher volumes.
Accordingly, there is less risk in long calls compared to owning shares. The calls can lock the price. Hence the investors can buy a stock at limited cost with a promise for a potential and significant leverage. The most one can lose is the price of the options. Meanwhile, Marvell’s shares jumped 8.2% to $21.77.
It is worth noting that technical analysis of stocks and trends has been in common use for decades and mainly by serious traders. Tools such as Simple Moving averages help in determining the stock’s future behavior. However, it does not offer a guarantee of success. Nonetheless, it is one of the main methods of analyzing stock prizes.
Let us explore Marvell Technology
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
The company is a leader in solutions regarding storage, networking, and connectivity of semiconductors. The company’s interest is in offering innovation into the digital storage industry by improving speeds of moving information. Some of the beneficial markets of the company’s interest include automotive, industrial, cloud and enterprise markets.