Options Traders, Analysts Take Notice of AVGO After Earnings

The equity remains up over 59% year-over-year

Assistant Editor
Mar 5, 2021 at 11:25 AM
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The shares of Broadcom Inc (NASDAQ:AVGO) are down 2.4% at $433.02 at last check, despite the chipmaker reporting a first-quarter earnings and revenue beat. What is hurting the company instead are disappointing chip sales, which fell below analysts' expectations amid a global semiconductor shortage. Still, no fewer than seven brokerage firms hit Broadcom stock with bull notes.

Digging deeper, these bull notes came in the form of price-target hikes, including one from J.P. Morgan Securities to of $570 from $500. However, the company also reeled in a price-target cut from UBS to $510 from $525. Analysts are optimistic towards AVGO, with 20 of the 23 in coverage calling it a "buy" or better. Plus, the stock's consensus 12-month price target of $502.30 is a 14.7% premium to current levels.

On the charts, AVGO stock is cooling off from a Feb 19, all-time high of $495.14. Shares are also slipping further below the $460 level, which served as an area of support in February. The 80-day moving average seems poised to contain today's pullback, though, and year-over-year the equity remains up 59.4%.

Today's option pits show calls and puts trading at a similar pace. So far, 5,881 calls and 5,392 puts have exchanged hands, which is two times what's typically seen at this point. Most popular is the weekly 3/5 450-strike call, where new positions are being opened. This means options traders are speculating on more upside for AVGO by the time the market closes today.

Now seems like a good opportunity to weigh in on Broadcom stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 45% sits higher than just 20% of all other readings in its annual range, suggesting options players are pricing in relatively low volatility expectations at the moment.

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