Enhancing Income Potential with Marvell Technology’s Covered Calls

Shareholders of Marvell Technology Inc (Symbol: MRVL) seeking to increase their income beyond the stock’s current 0.3% annualized dividend yield may consider selling the January 2027 covered call at the $155 strike. By doing so, they can collect a premium based on the $11.15 bid, resulting in an annualized return of 6.7% against the current stock price. This strategy, referred to as YieldBoost, offers a total annualized rate of 6.9% if the stock remains uncalled. However, any upside beyond $155 would be forfeited if the stock price rises to that level and the option is exercised. Notably, MRVL shares would need to appreciate by 73.5% for that event to occur. In this case, shareholders would realize an impressive 86% return at the trading level, along with any dividends received prior to the stock being called.

It’s essential to note that dividend payments are often unpredictable and closely aligned with each company’s profitability. Therefore, analyzing Marvell Technology Inc’s dividend history chart below can aid shareholders in assessing the sustainability of the current 0.3% annualized dividend yield.

Additionally, the following chart provides an overview of MRVL’s trailing twelve-month trading history, with the $155 strike indicated in red:

The above chart, along with the stock’s historical volatility, serves as a valuable resource when combined with fundamental analysis. This combination can help determine if selling the January 2027 covered call at the $155 strike presents a favorable risk-reward scenario. Notably, it’s important to recognize that most options tend to expire worthless, a common myth in options trading. Currently, we calculate Marvell Technology Inc’s trailing twelve-month volatility to be 61%, based on the last 249 trading days and today’s stock price of $89.79. For alternative call option contract ideas across various expiration dates, please visit the MRVL Stock Options page on StockOptionsChannel.com.

During mid-afternoon trading on Monday, the put volume among S&P 500 components reached 1.08 million contracts, with call volume at 1.80 million, resulting in a put:call ratio of 0.60. This figure reflects a high call volume relative to puts and indicates a strong preference for calls among buyers in today’s options trading.

Top YieldBoost Calls of the Nasdaq 100 »

Explore More:

• Funds Holding ESQ
• Institutional Holders of HBNK
• BSAE YTD Return

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.