Marvell Technology (MRVL) has experienced a remarkable rise, with its stock up over 130% year-to-date and more than 220% over the past year, driven by strong institutional interest and favorable market conditions in AI and custom silicon.
However, as MRVL approaches its earnings report, concerns arise regarding its current valuation, with a forward P/E ratio reaching approximately 45x, the highest in a decade. The stock's recent performance has pushed it significantly above its long-term moving average, and the options market is pricing in a larger-than-average move post-earnings.
The author suggests a cautious approach, recommending to sell a put option at a strike price of $162.50 to potentially acquire the stock at a lower price if it pulls back. This strategy allows investors to benefit from the current high premiums while waiting for a more favorable entry point, emphasizing the importance of not chasing the stock's current strength but rather buying on weakness