What's Dragging This Chip Stock Lower

Options bears are blasting AVGO today

Deputy Editor
Sep 21, 2023 at 10:32 AM
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Tech publication The Information reported that Alphabet's (GOOGL) Google is thinking about dropping its artificial intelligence (AI) chip supplier Broadcom Inc (NASDAQ:AVGO) as early as 2027. The company is looking to design the chips in-house, though it's also worked to replace Broadcom with Marvell Technology (MRVL) as its supplier for Ethernet switches chips.

AVGO is down 3.7% to trade at $799.93 after the news. What's more, the stock just broke below long-term support at its 100-day moving average, though it still stands more than 40% higher in 2023. 

Puts are outpacing calls in the options pits today. So far, 21,00 bearish bets have crossed the tape versus 11,00 bullish, with overall volume running at double the intraday average amount. New positions are opening at the top four contracts, led by the weekly 9/22 800-strike put.

This penchant for pessimism is nothing new, according to Broadcom stock's Schaeffer's put/call open interest (SOIR) ratio of 1.334. This ratio sits higher than 74% of readings from the past 12 months.

 

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