Analysts, Options Traders Blast AVGO After Earnings

Today's options pits are trading at four times the intraday average

Deputy Editor
Jun 4, 2021 at 10:48 AM
facebook twitter linkedin


Broadcom Inc (NASDAQ:AVGO) secured no less than 10 bull notes this morning, following the company's upbeat fiscal second-quarter earnings report. Broadcom reported quarterly profits and revenue that both finished slightly above Wall Street's forecasts. Going forward, the chip maker gave a better-than-expected outlook, as the adoption of 5G technology continues to ramp up. 

Circling back to the flurry of bull notes, these came in the form of price-target hikes, including a huge bump to $585 from $570 at J.P. Morgan Securities. In addition, UBS, Rosenblatt Securities, and Jefferies all upped their price targets to $550. Coming into today, the majority of analysts were extremely optimistic towards AVGO. In fact, 18 of the 21 in coverage called the security a "buy" or better, with three rating it a "hold," and not a "sell" in sight. Plus, the stock's consensus 12-month price target of $525.22 is a 13% premium to last night's close.

Broadcom stock is relatively muted in response, last seen 0.2% higher at $465.68. On the charts, AVGO recently bounced off the $420 mark, the third time the shares have done so this year, as the level has solidified itself as a floor for the stock's biggest pullbacks. Yesterday's smaller pullback was saved by the 100-day moving average, which put pressure on the shares for the better part of a month. Year-to-date, AVGO is up 6.2%.

Today's option pits show calls and puts trading at a similar pace. So far, 2,683 calls and 2,098 puts have exchanged hands, which is four times what's typically seen at this point. Most popular is the weekly 6/4 477.50-strike call, followed by the 475-strike call from the same series. 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 34% sits higher than just 28% of all other readings in its annual range, suggesting options players are pricing in relatively low volatility expectations at the moment.

 

 

 

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners