Strong forecasts, falling stock prices. That pattern keeps showing up in semiconductors, and in episode 475 of Options Playbook Brian Overby keeps leaning into it. After Micron’s blowout earnings were met with selling, he sold a put spread on Micron on Monday. Now Marvell Technology has done the same thing: after an investor day where it forecast very strong demand through 2028 and analysts raised targets, the stock sold off. Brian first checks the Micron trade, the October 30 1,030/1,020 bull put spread sold for about $3.45. It’s slightly profitable and he’s keeping it. Then he builds the Marvell trade. With MRVL near $281 and no earnings until December, he goes out 37 days to the November 13 expiration. He sells the 265 put and buys the 255 put: 10 points wide and 15 points out of the money. The credit is about $3.50, and when the quote briefly jumps he raises his limit to $3.75. He rejects the 260/250 spread at about $3.20 because it falls short of his core rule: always collect at least a third of the spread’s width. Implied volatility is about 58%, close to historical volatility of about 59%. On the chart, he sees room back up to about 330. He also checks a wider 260/245 version but passes because it doesn’t reach $5 in credit. He covers several other ideas: Adobe, beaten down as investors worry AI threatens software, is near a support level going back to 2019. He sees it as an interesting bottom-fishing trade, not a long-term buy. A huge in-the-money call trade in Micron before earnings, roughly $40 million, paid off even though the stock first dropped. Brian wonders why the buyer paid for intrinsic value instead of buying cheaper out-of-the-money calls. His Chevron diagonal ahead of October 30 earnings: he walks through rolling the short October 16 215 call to October 23 for a net credit of about 60–70 cents to lower the cost basis, and suggests rolling by Friday. A viewer’s VIX hedge: fine to keep as small black-swan insurance. Berkshire Hathaway reportedly adding to homebuilder Lennar. Key takeaways: Selling put spreads after strong forecasts and pullbacks is the current theme. Collect at least a third of the width; skip spreads that don’t. Avoid holding credit spreads through earnings. Diagonals need active rolling to lower cost before the event. Options involve risk. This episode is educational and not a recommendation. |
