Broadcom Puts Pop Ahead of Earnings

AVGO puts are trading at two times the average intraday pace today

Digital Content Manager
Sep 11, 2019 at 11:38 AM
facebook X logo linkedin

Broadcom Inc (NASDAQ:AVGO) stock is trading higher today, up 0.6% at $296.29, ahead of tomorrow's fiscal third-quarter earnings report from the semiconductor concern. The equity has had a good run on the charts of late, set to clock a six-day win streak today. With recent support from its 120-day moving average, the stock now boasts a roughly 17% year-to-date gain, and is set for its highest close in over a month. 

AVGO Sept 11

The brokerage bunch is optimistic toward AVGO, with 17 of the 22 in coverage calling the stock a "buy" or better. On the other hand, the 12-month consensus target price of $307.08 is only a slim 3% premium to current levels. 

Options traders have taken a more pessimistic stance, evidenced by AVGO's Schaeffer's put/call open interest ratio (SOIR) of 1.07, which sits in the top percentile of its annual range. This suggests short-term options players are much more put-heavy than usual toward the stock. This can be seen at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), too, where Broadcom's 10-day put/call volume ratio of 1.11 sits in the 84th percentile of its annual range. 

This bearish behavior has carried over into today's trading, with 5,500 puts exchanging hands so far -- two times the intraday average -- compared to 2,700 calls. It looks like a majority of these positions are being opened at the October 170 and 175 puts, followed by the weekly 9/27 170-strike and 175-strike puts. 

Looking at post-earnings moves from the past two years, returns for AVGO are split, with the equity's biggest move being an 8.2% pop after the company's mid-March earnings this year. This time around the options market is pricing in a one-day post-earnings move of 7.2%, regardless of direction, compared to an average post-earnings move of 4.1% over the past eight quarters.


Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.

Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!




Rainmaker Ads CGI