AVGO Options Signal $360 Put Pressure as Bulls Target $400–$450 Breakout: Here’s How to Play the AI Rebound

• AVGO down 10.7% on 49M+ shares after Q4 earnings beat but margin warnings
• $360 put OI surges to 11,465 (next Friday expiry), signaling key support
• $400–$450 call OI spikes as bulls bet on AI-driven rebound

Broadcom’s (AVGO) 10.7% plunge today has created a crossroads for traders. The options market is split: heavy put open interest at $360 suggests a floor, while call buying above $400 hints at a potential rebound. Let’s break down what’s really happening.

The $360 Put Wall and the $400–$450 Call Rally

The options chain tells a story of caution and optimism. For this Friday’s expiring puts, the $360 strike dominates with 11,465 open contracts—nearly double the next highest put at $355. This isn’t just noise: it’s a liquidity wall. If AVGO dips below $360, those puts could create a short-covering rally.

On the call side, $400–$450 strikes (next Friday expiry) are packed with bullish energy. The $400 call has 9,539 open contracts, and the $450 call (this Friday) has 11,948. Think of it like a magnet: if AVGO holds above $360, these calls could ignite a rebound. But here’s the catch: the put/call ratio for open interest is 1.03, meaning bears and bulls are nearly tied. This isn’t a clear breakout—it’s a tug-of-war.

Earnings Beat, Margin Woes, and the AI Bubble Debate

Broadcom’s Q4 results were stellar: $18B revenue, 74% AI chip growth, and a $16.2B cash hoard. But the market fixated on CEO Hock Tan’s warning that AI margins will shrink. The stock’s 5% pre-market drop (which turned into a 10% intraday plunge) reflects that tension.

Here’s the twist: the news and options data align. Investors are betting on AI’s long-term potential (hence the $400+ call buying) but hedging against near-term margin risks (the $360 put wall). The $73B AI backlog is a double-edged sword—it’s growth, but also a concentration risk if one customer pulls back.

Trade Ideas: Puts for Protection, Calls for Rebound Bets

1. Bearish Play: Buy $360 Puts (Dec 19 expiry)

• Why? The 11,465 open puts at $360 create a liquidity magnet. If AVGO breaks below $360, these puts could trigger a bounce.
• Entry: Buy AVGO20251219P360 at $10–$12.
• Target: Sell at $15–$18 if the stock hits $350.

1. Bullish Play: Buy $400 Calls (Dec 19 expiry)

• Why? The 9,539 open calls at $400 suggest a price level where buyers are ready to pounce.
• Entry: Buy AVGO20251219C400 at $8–$10.
• Target: Hold for a rebound to $420+ if AVGO holds above $360.

1. Stock Trade: Buy on a $340–$341.44 Bounce

• Why? The 30D support zone at $339.98–$341.44 is a critical level. If AVGO tests this range, it could attract bargain hunters.
• Entry: Buy near $340 with a stop below $335.
• Target: $375–$380 if the AI narrative holds.

Volatility on the Horizon: Balancing Risk and Reward in AVGO’s AI Narrative

The next 72 hours will be critical. If AVGO holds above $360, the $400–$450 call buyers could push it back toward its 52-week high. But a breakdown below $340 would validate the puts and force a reevaluation of AI’s valuation. This isn’t a simple long or short—it’s a timing game.

For now, the options market is hedging both outcomes. Your move? If you believe in AI’s long-term story, use the selloff to buy calls or the stock near support. If you’re cautious, the $360 puts offer a low-cost hedge. Either way, AVGO’s next move will tell us a lot about the sector’s health.