While the Trump administration’s aggressive trade policies have caused global uncertainty, the semiconductor sector—particularly companies like Marvell Technology (MRVL)—has felt the impact acutely. The pressure on MRVL stock stems not only from tariffs targeting major economies, such as China, but also from the industry’s dependence on rare earth minerals, which are crucial to chip production. The stock has taken a brutal hit since January, shedding more than 50% of its value from lofty highs around $125. However, there are several reasons why MRVL could be in line for a turnaround, and I’m bullish.
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Marvell, which specializes in designing and producing semiconductors for data infrastructure, cloud computing, carrier networks, and storage, plays a vital yet often under-the-radar role in the tech ecosystem. Unlike some of its more prominent peers, Marvell operates largely behind the scenes. However, as more enterprise and consumer applications migrate to the cloud and artificial intelligence becomes increasingly embedded across industries, demand for high-performance networking and storage solutions is poised to grow, positioning Marvell to benefit significantly from these secular trends.
Under prior paradigms, Marvell didn’t have to worry as much about access to critical minerals. With the Trump administration taking a particularly tough stance on China, though, circumstances are much different. China, along with being the world’s second-largest economy, also dominates the production of rare earths. These minerals are critical to several sectors, including tech and defense.
Fortunately, cooler and rational heads may prevail. Although brief on details, diplomats from the U.S. and China have reportedly reached a trade agreement. This new framework includes assurances on rare-earth supply and potential tariff easing, two elements that directly affect Marvell’s business.
Investors may cheer MRVL stock, and I’m certainly bullish on the underlying enterprise. However, for those who are willing to take the risk, an options strategy may be especially attractive.
Laying Out the Framework for Betting on MRVL Stock
From an investment perspective, MRVL stock is appealing because of the implied shift in tone from the White House. Previously, President Donald Trump frequently lashed out at Beijing over perceived unfair practices. However, the trade agreement suggests that, once again, Trump is backing down from his bravado.
Stated another way, investors are concerned about narratives or the “why” of an asset or enterprise. The issue with this approach, though, is that it takes time to materialize. When analysts provide price targets, they usually have a 12-month timeframe. That affords a lot of flex for the thesis to pan out.
On the other hand, traders (particularly options traders) are focused on the “how” — how much, how fast, how likely. Since all options expire, it’s not enough for a thesis to be correct in terms of magnitude (y-axis); it must also be profitable within the allotted time period (x-axis). As such, options are effectively multi-dimensional.
Given the higher complexities, traders live in the world of probabilities, but not just any garden-variety probabilities. For most practical applications, this mathematical discipline falls into two categories: derivative and conditional. The former calculates odds of an event materializing based on the entire distribution of the target dataset. The latter calculates the odds of an event stemming from a specific subset of the data.
Using Baseball to Explain Stock Probability
Colloquially, the easiest way to distinguish the two is to apply a baseball analogy. A derivative probability is akin to a player’s batting average last season. A conditional probability, in contrast, is the batting average when there are runners in scoring position (RISP).
Conditional probabilities are far more helpful because they reveal the “probability of the now” — how likely is the current setup to generate profits once the trigger is pulled today? One major caveat, though, is that conditional probabilities require discrete states rather than continuous signals, such as share prices or financial ratios. In other words, the underlying metric of analysis must abide by first-order principles.
To achieve this discretization, traders can convert price action into market breadth sequences or sequences of accumulative and distributive sessions. In this manner, price discovery ceases to become a random collection of datapoints but a binary balance of demand (accumulation) or no demand (distribution). Binary constructs can be categorized and quantified, thus enabling probabilistic analyses.
Putting Theory into Practice
Let’s now move beyond the theoretical, academic realm into the real-world domain. In the past two months, MRVL stock printed a “4-6-U” market breadth sequence: four up weeks, six down weeks, with a net positive trajectory across the 10-week period. This pattern is quite unique in that the balance of distributive sessions is greater than accumulative, yet the net trajectory is positive.
What’s even more surprising, In 65.85% of cases, the following week’s price action results in upside, with a median return of 4.62%. On Friday, MRVL stock closed at $67.19. If the implications of the 4-6-U pan out as projected, the security could reach $70.29 in short order, perhaps in a week or two.
What makes the above setup so appealing is the baseline probability. On any given week, the chance that a long position in MRVL stock will be profitable is only 49.82%. Therefore, an incentive exists to take a swing.
To again extend the baseball analogy, the 4-6-U sequence is creating a statistically favorable matchup against the opposing pitcher. So, as a manager, you would give your guy the go-ahead to swing. It doesn’t guarantee a hit, but the numbers favor a bullish approach. In other words, you’re using math as your north star, not cute vibes sourced from groupthink and personal emotions.
Looking at the options chain, in my opinion, the most attractive idea is the 68/70 bull call spread expiring July 3. This transaction involves buying the $68 call and simultaneously selling the $70 call, for a net debit paid of $90. Should MRVL stock rise through the short strike price (70) at expiration, the maximum reward is $110, a payout of over 122%.
Why do I think it’s attractive? Primarily, the empirical data suggests that MRVL stock has a good chance of breaching $70. With the July 3 expiration, you have roughly three weeks for the aforementioned thesis to pan out. Also, market makers have a dim view of MRVL, which explains the 122% payout.
Wall Street really isn’t aware of the risk modeling above because it’s sourced from disparate frameworks: binary soteriology from the Christian faith, conditional transition logic from Markovian principles, and decision sequencing (via sabermetrics) from baseball.
The above model is unconventional, and yet, it is structured and coherent. Best of all, because it lacks awareness, there’s less chance of reflexivity — the awareness of a protocol changing its effectiveness. Readers can use this reality to their advantage.
Is Marvell Technology a Good Stock to Buy?
On Wall Street, MRVL stock carries a Strong Buy consensus rating based on 27 Buy, four Hold, and zero Sell ratings over the past three months. MRVL’s average stock price target of $89.86 implies approximately 27% upside potential over the next twelve months.
It’s Time to Play Ball with MRVL Stock
As a prospective investor in Marvell Technology, it’s important to weigh the company’s fundamental narrative, particularly given the longer time horizons typically associated with equity price targets. However, options trading operates under a very different dynamic—one where time decay and probability play a central role.
In the options market, success hinges on managing risk through a probabilistic lens. By applying conditional probability models, traders can adopt a structured, data-driven approach to potentially generate returns from MRVL stock. Within this statistical framework, current market conditions may present an attractive opportunity for those looking to take a calculated swing.
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