Bears load up on puts ahead of Marvell Technology's 3Q report

However, judging by Thursday's option activity, traders aren't feeling too optimistic about Marvell's prospects. The most active strike in morning trading was the February 2010 16 put, where 5,005 contracts crossed the tape. All of this volume changed hands at the ask price, indicating that these puts were purchased, and implied volatility was up 1.2% at last check.

Currently, the February 16 put has just 660 contracts in open interest, so it seems safe to say that the bulk of the action at this strike consists of new bearish bets on MRVL. The stock is trading just shy of $17 per share at last check, so it seems that speculators are anticipating a pullback during the near term.

Even if Marvell does snap its winning streak in the earnings spotlight, the equity could find a floor at its 10-week and 20-week moving averages, which are currently located at $15.27 and $15.01, respectively. Since January, MRVL has finished just one week below these trendlines. Meanwhile, with the February 16 put asked at $1.05, Thursday's bearish option players would need MRVL to fall below $14.95 to start collecting profits.

Elsewhere on Wall Street, short sellers have recently been hitting the exits. Short interest on the security is down 7.8% during the past month, but this supply of sideline cash isn't tapped yet -- shorted shares still account for 3% of the equity's float.

Overall, the prospects look solid for Marvell ahead of the report. A better-than-expected report could spark an unwinding of pessimistic sentiment, supplying the stock with fresh buying pressure. On the other hand, any sell-off sparked by a disappointing report will likely be contained by reliable trendline support.

Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.