Broadcom's AVGO Plummets 5.1%: Insider Selling, AI Optimism, and Options Volatility Collide

Summary
• AVGO drops 5.13% to $336.41, hitting a 52-week low of $334.42
• Insiders sold $490M in shares over the past year, including $121M by Henry Samueli
• Analysts upgrade AVGO to 'Buy' as AI-driven demand and VMware integration drive optimism

Broadcom’s AVGO is in freefall, trading 5.13% lower at $336.41 as of 17:48 ET. The stock has swung between $334.42 and $350.69 intraday, reflecting a volatile session driven by conflicting signals: insider selling, AI optimism, and a surge in options activity. With the semiconductor sector rallying on AI infrastructure demand, AVGO’s sharp decline raises questions about short-term sentiment and strategic positioning.

Insider Selling and AI Optimism Create Divergent Pressures
Broadcom’s AVGO is under pressure from a confluence of factors. Insider selling, including a $121M transaction by Chairman Henry Samueli at $188/share, has raised red flags for shareholders. While insiders own 1.1% of the company, the $490M in sales over the past year suggests caution. Meanwhile, the stock’s AI-driven growth narrative—bolstered by a 74% Y/Y surge in AI semiconductor revenue and a new XPU customer—has created a tug-of-war between bearish insider signals and bullish fundamental momentum. Analysts remain optimistic, with 46 of 48 covering firms recommending AVGO, but the intraday selloff reflects short-term profit-taking and positioning ahead of the January 23 options expiration.

Semiconductor Sector Gains Momentum Amid AI Demand
The semiconductor sector is surging on AI infrastructure demand, with NVIDIA leading the charge after securing H200 chip exports to China. TSMC’s 2nm node leadership and SK Hynix’s $13B investment in memory chips further underscore the sector’s strength. While AVGO’s 5.13% decline lags behind the broader sector’s rally, its AI and VMware software integration position it as a key player in the $200B AI silicon market. However, insider selling and a 68.98x P/E ratio highlight valuation risks compared to peers like AMD and Intel, which are benefiting from Trump-era policy tailwinds.

Options and ETFs Highlight Short-Term Volatility and Strategic Entry Points
• 200-day MA: $295.42 (far below current price)
• 50-day MA: $359.57 (resistance ahead)
• RSI: 61.52 (neutral but bearish bias)
• MACD: -4.28 (bearish divergence)
• Bollinger Bands: $328.74–$359.11 (current price near lower band)

AVGO’s technicals suggest a bearish near-term setup, with support at $328.74 and resistance at $359.57. The Roundhill AVGO WeeklyPay ETF (AVGW) and Direxion Daily AVGO Bull 2X Shares (AVL) offer leveraged exposure, but both are down 6.05% and 10.06% respectively, reflecting the stock’s volatility. For options, two contracts stand out:

• AVGO20260123P325 (Put, $325 strike, Jan 23 expiry):
- IV: 42.71% (moderate)
- LVR: 71.19% (high leverage)
- Delta: -0.3011 (moderate sensitivity)
- Theta: -0.0394 (time decay)
- Gamma: 0.0147 (price sensitivity)
- Turnover: $284,739
- Payoff (5% downside): $18.59
This put option offers high leverage and liquidity, ideal for a 5% downside scenario.

• AVGO20260123C345 (Call, $345 strike, Jan 23 expiry):
- IV: 39.42% (reasonable)
- LVR: 64.62% (high leverage)
- Delta: 0.3608 (moderate sensitivity)
- Theta: -0.8133 (aggressive time decay)
- Gamma: 0.0171 (strong price sensitivity)
- Turnover: $1.13M
- Payoff (5% downside): $0 (out-of-the-money)
This call is a high-risk, high-reward play for a rebound above $345.

Aggressive bulls may consider AVGO20260123C345 into a bounce above $345, while bears should watch for a breakdown below $325.

Backtest Broadcom Stock Performance
The backtest of Broadcom Inc. (AVGO) after an intraday plunge of -5% from 2022 to the present shows positive short-to-medium-term gains. The 3-day win rate is 55.86%, the 10-day win rate is 60.98%, and the 30-day win rate is 71.00%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest was 14.41% over 30 days, suggesting that AVGO has the potential for recovery and even exceed pre-plunge levels.

Broadcom's AVGO at Crossroads: Watch $325 Support and Options Volatility for Clarity
AVGO’s 5.13% decline reflects a critical juncture between bearish insider signals and AI-driven optimism. With the stock near its 52-week low and options volatility surging, the next 48 hours will test $325 support. A breakdown below this level could trigger a retest of $315, while a rebound above $350 would validate the AI growth narrative. Investors should monitor the Roundhill AVGO WeeklyPay ETF (AVGW, -6.05%) and NVIDIA (NVDA, -1.97%) as sector barometers. For now, short-term volatility and options positioning suggest a wait-and-see approach, with key levels at $325 and $350.