AVGO Options Signal $340 Put Contingency as Bulls Target $370 Breakout: How to Play the AI Giant’s Volatility Play

• Broadcom (AVGO) trades at $347.40, down 0.7% amid oversold RSI (27.59) and a bullish Kline pattern.
• Options data shows heavy put open interest at $340 (OI: 8,146) and call OI at $370 (7,007) for Friday’s expiry, hinting at a $340–$370 price battleground.
• Analysts raised price targets to $510, but insider selling and a 73.32 P/E ratio highlight valuation risks.

Here’s the core insight: options market sentiment is split between cautious bears hedging at $340 and bulls eyeing a $370 breakout. The stock’s technicals and news flow suggest a volatile January, but the path depends on whether AI-driven optimism or valuation concerns win out.

The $340 Put Wall vs. $370 Call Pressure: A Battle for AVGO’s Direction

The options chain tells a story of tension. For Friday’s expiry (Jan 2, 2026), puts at $340 ($AVGO20260102P340) dominate with 8,146 open contracts—nearly double the next put at $300. This suggests institutional players are hedging against a sharp drop, possibly fearing a retest of the 200D moving average ($338.30). On the call side, the $370 strike ($AVGO20260102C370) has 7,007 OI, reflecting bets on a rebound above the 30D support ($341.67).

But here’s the twist: the put/call ratio (1.04) isn’t screaming for a bearish move. Instead, it hints at a range-bound scenario where bulls and bears are both positioning. The lack of block trades adds ambiguity—no whale-sized bets to tip the scales. For now, AVGO is dancing on a tightrope between $340 and $370.

News Flow: AI Optimism vs. Valuation Reality Check

Broadcom’s Q4 earnings beat ($1.95/share) and dividend hike ($2.60 annualized) are positives. Analysts love the AI infrastructure angle, with JPMorgan and Truist raising targets to $475–$510. But the stock’s 51% YTD rally has left it with a P/E of 73.32—well above its 5-year average.

Insider selling ($239M in 90 days) adds noise. While CEO Hock Tan’s $42M sale isn’t necessarily bearish (could be tax-related), it’s a red flag for some. The key takeaway? The stock’s AI narrative is strong, but its valuation is fragile. A pullback to the lower Bollinger Band ($308.92) could trigger panic, but the 200D MA and $340 puts might cushion the fall.

Actionable Trades: Bull Call Spread or Bear Put Hedge?

For bulls: Buy the $350 call ($AVGO20260109C350) and sell the $370 call ($AVGO20260109C370) for a bullish vertical spread. If AVGO breaks $370, the spread could net 15–20% in a week. Entry: $345–$347 (current price). Stop-loss: $340.

For bears: Buy the $340 put ($AVGO20260109P340) as insurance. If the stock gaps below $340, the put could gain 30%+ by Jan 9.

Stock traders: Consider buying AVGO near $345 if it holds above the 30D support ($341.67). Target: $365 (RSI reversion to 50). Exit if it drops below $338.30 (200D MA).

Volatility on the Horizon: AVGO’s $340–$370 Crucible

The next 10 days will test AVGO’s resolve. A break above $370 could validate the bullish AI thesis, while a drop below $340 might force a reevaluation of its valuation. The options market is pricing in a 15–20% move either way—a classic volatility play. For traders, the key is to stay nimble: use the $340 put as a floor and the $370 call as a ceiling. If AVGO can’t break out of this range by mid-January, the story shifts from "AI darling" to "overvalued tech stock."

Bottom line: This is a high-conviction setup. If you’re in, manage risk aggressively. If you’re out, watch the $340–$370 range like a hawk.