Marvell Technology Inc (MRVL)

[SyndicateTwo]

I can't believe I said that. I was looking at the breakout in the chart. It was pretty clear. But I didn't understand the mechanics behind what was going on. Karen Finerman on FastMoney explained away pretty well as the arbitrade to cover/buy the common and short the preferred on the dilution of the conversion.

Duh.

I didn't buy it, but it did look like a technical breakout.


I think one of the stocks to buy in Oct will be DELL. Why? Well, if INTC is correct that PC sales have bottom (their words), then when the market pulls back into Oct, DELL could be under $10 again. That would setup a monster of all monster rallies because all the pros who all follow these cycles and wave patterns will feel confident they aren't buying into a corrective wave but rather a new beginning count. DELL could double back to the $20s easy. A $3000 investment in a $15 call 2 or 3 strikes out could be done well under $1. Let's say you can get them at $.60. $3000 / $60 = 50 contracts.

If DELL ran to $20, those .60 calls would be $5. $5 / .60 = 8 or 8x$3000 = $24,000.

In other words, you'd turn $3000 into $24000. That's the kind of trade I think will setup in Oct through Feb .


MRVL would be back under $10 and could run to $15+. Same trade. The low volitility in it will keep those out of the money calls cheap.