AVGO Options Signal $355 Put Defense and $370 Call Rebound Potential: How to Trade the AI Sector's Repricing

• Broadcom (AVGO) plunges 11.4% to $359.99 amid AI margin concerns despite record $18B revenue
• Options market shows 1.03 put/call OI ratio with heavy 370C and 355P positioning for Dec 19
• Technical indicators suggest $339 support and $375 moving average as critical junctures

The options market and technicals are painting a fascinating picture: AVGO's 11% collapse has created a high-stakes chessboard where bears are fortifying at $355 while bulls are amassing call options at $370. This isn't just a stock drop—it's a sector-wide repricing of AI optimism. The key question now is whether this represents a buying opportunity for the long-term AI story or a warning shot for overvalued tech plays.

The $370 Call Wall and $355 Put Fortress

Looking at next Friday's options chain, the 370C (AVGO20251219C370) stands out with 12,646 open contracts—nearly 10% more than the next strike. This suggests institutional players are hedging a potential rebound off the $339 support level (30D support band). Meanwhile, the 355P (AVGO20251219P355) at 7,470 open contracts indicates deep bearish conviction, with traders betting on a test of the $323 Bollinger Band low.

The 1.03 put/call OI ratio tells us the market isn't decisively bearish—yet. But the sheer volume of put buying (119,863 puts vs 116,421 calls) shows investors are prioritizing downside protection. What's fascinating is the absence of block trades, which means this is pure retail/institutional sentiment without major whale moves skewing the data.

Why the AI Earnings Beat Became a Sell-Off Catalyst

Broadcom's $18B revenue beat and $73B AI backlog should be bullish, but investors are fixated on margin compression. The 74% AI revenue growth comes with 100-basis-point gross margin contraction—a detail that's amplified sector-wide fears about AI's profitability. This explains why AVGO fell harder than peers: it's the most exposed to near-term margin pain while still being seen as an AI leader.

The market is essentially saying, "We love the AI future, but not at these margin levels." This creates a unique trade: short-term pain for long-term gain. The challenge is timing the reentry—will bears push below $323, or will the $339 support hold to trigger a bounce?

3 High-Probability Trade Setups

1. Bull Call Spread: Buy AVGO20251219C370 and sell AVGO20251219C400 if AVGO rebounds above $365. This caps risk while capturing a potential 8% move to the 30D MA at $375.
2. Put Hedge: Buy AVGO20251219P355 at $12.50 if AVGO breaks below $358.83 intraday low. This protects against a test of the $323 Bollinger Band while limiting cost.
3. Stock Buy-Dip Play: Consider entry near $339 if price holds above the 30D support range (339.98–341.44). Target $375 as a 9% move to the middle Bollinger Band.

Volatility on the Horizon

This is a textbook case of a sector overcorrection. The RSI at 72.78 shows the drop has been extreme, while the MACD histogram at +3.03 suggests momentum could reverse soon. The real opportunity lies in the $339–$375 range: break above and it's a classic short-covering rally; break below and the AI trade gets bloodied. Either way, we're looking at a pivotal week for AVGO's 56% YTD gain—will the AI bull stay alive, or is this the start of a deeper correction?