Thursday Options Update: MRVL, PWR, IMAX & AMED

Marvell Technology Group Limited (MRVL) – Shares of the semiconductor company are nearly 3.5% lower today to $15.85. Bearish investors braced for continued downside movement in the stock by picking up November contract put options. One trader purchase 10,000 puts at the now in-the-money November 16 strike, for an average premium of 85 cents each, out of a total 11,200 put options exchanged at the same strike thus far in the session. Perhaps the investor is long the stock and looking to beef up on downside protection in case MRVL continues to decline through expiration in November. If this is the case, protection will kick in if shares decline through the breakeven point at $15.15.

Quanta Services, Inc. (PWR) – A long-term bullish play on the provider of specialty contracting services today caught our attention amid a more than 1% rally in shares to $22.00. The bullish reversal we observed in the January 2011 contract suggests at least one investor expects Quanta Services to move higher by expiration. The reversal involved the sale of 4,671 puts at the January 20 strike for a premium of 3.30 apiece, spread against the purchase of 4,671 calls at the higher January 25 strike for 3.10 each. The transaction results in a net credit of 20 pennies per contract. The full credit is retained by the investor as long as shares of PWR remain higher than $20.00 through expiration. Additional profits are available if the stock rises above the effective breakeven point at $25.00. We note that Quanta’s shares last traded up to $25.09 on September 11, 2009.

Imax Corp. (IMAX) – The motion picture technologies and large-format film presentation company appeared on our ‘hot by options volume’ market scanner due to bullish options action in the November contract. Shares of IMAX are currently up 1.5% to $10.82. Approximately 3,800 call options were purchased at the now in-the-money November 10 strike for an average premium of 1.25 apiece. Investors holding these contracts may accrue profits if shares rise 43 cents from the current price to breach the breakeven point at $11.25 by expiration. Increased options activity on the stock lifted implied volatility by 35% from and opening reading of 40% to an intraday high of 54%. Traders exchanged 7,198 contracts thus far today, which represents 44% of total existing open interest on the stock of 16,422 lots.

Amedisys, Inc. (AMED) – Shares of the provider of home health care and hospice services are down 5.5% to $42.40 today. The firm is scheduled to reveal its third-quarter earnings before the market opens on Tuesday, October 27, 2009. One investor made bullish moves in the November contract this morning despite the decline in share price. It appears the trader established a call spread by purchasing 2,000 calls at the November 45 strike for an average premium of 2.23 apiece, marked against the sale of 2,000 calls at the higher November 50 strike for 60 pennies each. The net cost of the optimistic play amounts to 1.63 per contract. Profits on the transaction will begin to accumulate if shares of AMED rally 10% over the current price to surpass the breakeven price of $46.63. Maximum potential profits of 3.37 per contract are available to the investor if shares surge 18% to $50.00 by expiration next month.