AVGO Options Signal $385 Call Contingency as AI Backlog Fuels Bullish Momentum – Here’s How to Position

• Broadcom (AVGO) trades at $334.26, down 0.55% from its $336.10 close, amid a short-term bearish trend but long-term bullish setup.
• Options data shows heavy call open interest at $385 (16,879 contracts) and $350 (6,634), while puts peak at $320 (7,415), signaling a bullish bias with risk below $320.
• Q3 2025 earnings revealed $15.96B revenue, $5.2B AI growth, and a $10B XPU order, validating institutional optimism despite valuation concerns.

The interplay of AVGO’s options activity and technicals paints a compelling picture: a short-term consolidation phase within a long-term bullish framework. With call open interest (OI) outpacing puts by a 1.05:1 ratio and AI-driven fundamentals reinforcing upside potential, the stock is primed for a breakout—or a sharp correction if key support fails. Let’s dissect the data to identify actionable opportunities.

Bullish Call OI at $385 and $350 Suggests Contingency Bets on AI-Driven Breakouts

The options chain reveals a striking imbalance: the top OTM call at $385 (16,879 OI) dwarfs the nearest put at $320 (7,415 OI). This suggests institutional players are hedging against a potential $334.26-to-$385+ move, likely tied to Broadcom’s $10B XPU order and Q4 AI revenue guidance of $6.2B. The $350 call (6,634 OI) acts as a secondary liquidity magnet, indicating a possible target zone if the stock retests its 30D moving average at $323.94.

Conversely, the top puts at $320 and $315 (7,415 and 4,156 OI) highlight a critical support cluster. A close below $320 would trigger a bearish cascade, potentially dragging the stock toward the 200D moving average at $242.51. While the put/call ratio of 0.9566 (favoring calls) suggests a net bullish bias, the concentration of puts at $320 implies a high probability of a short-term bounce if the stock approaches that level.

Notably, no block trades have been reported, suggesting the current options activity is driven by retail and institutional speculation rather than large-scale institutional positioning. This could mean the $385 call contingent is more speculative, increasing volatility risk ahead of Friday’s expiration.

AI Revenue Momentum and Analyst Upgrades Validate Options Sentiment

Broadcom’s Q3 results—$15.96B revenue, $5.2B AI growth, and $7.0B free cash flow—have cemented its status as a leader in the $475B AI chip market. The $10B XPU order from a fourth client (potentially OpenAI) and CEO Hock Tan’s compensation tied to AI milestones further reinforce this narrative. Analysts from J.P. Morgan and Mizuho have raised price targets to $400, with Truist Securities upgrading to “Buy” on dividend growth and M&A synergies.

However, valuation risks persist. At 66.35x forward earnings and 25.87x forward sales, AVGO trades at a premium to peers. A Seeking Alpha downgrade warns of “peak euphoria,” while Zacks analysts urge caution on margin pressures. These mixed signals create a tug-of-war between bullish fundamentals and bearish technicals, making the $320 support level a critical inflection point.

Actionable Trade Ideas: Calls for AI Breakouts, Puts for Downside ProtectionOptions Strategy:

• Bullish Play: Buy the $385 call (expiring Friday) at $16,879 OI. This strike aligns with the upper Bollinger Band ($381.81) and represents a high-probability target if AI revenue momentum accelerates. A $334.26 entry with a stop below $320 offers a 15% upside to $385.
• Bearish Hedge: Buy the $320 put (expiring Friday) at $7,415 OI. This strike acts as a liquidity magnet and offers downside protection if the stock retests the 200D moving average. A $334.26 entry with a stop above $339.08 (intraday high) limits risk to 1.7%.

Stock Strategy:

• Long Position: Enter near $305.59–$307.19 (30D support) with a target at $339.08 (intraday high). A close above $339.08 could trigger a retest of the upper Bollinger Band ($381.81).
• Short Position: Enter near $339.08 with a stop at $340.00 and a target at $320.00. This play capitalizes on overbought RSI (50.63) and MACD divergence (9.82 vs. 12.64 signal line).

Volatility on the Horizon: Balancing AI Optimism and Valuation Realism

Broadcom’s options activity and fundamentals suggest a high-conviction bullish setup, but the stock’s elevated valuation demands caution. The $385 call contingent reflects institutional bets on AI-driven growth, while the $320 put liquidity highlights a potential short-term floor. Traders should monitor Q4 guidance ($17.4B revenue) and cash flow trends to validate the AI narrative. If the stock holds above $320, the long-term bullish case remains intact; a breakdown below $305.59 would signal a shift in sentiment. Position sizing and stop-loss placement are critical in this high-volatility environment.