AVGO Options Signal $385 Call Contingency as AI Earnings Fuel $17.4B Revenue Outlook

• Broadcom (AVGO) trades at $335.97, down 0.04% intraday, with a short-term bearish trend but long-term bullish bias.
• Options data shows heavy call open interest at $385 (16,879 contracts) and put OI at $320 (7,415 contracts), signaling asymmetric upside potential.
• Q3 2025 earnings beat estimates, with AI revenue surging 63% to $5.2B and Q4 guidance raised to $17.4B.

The interplay of AVGO’s technicals, options positioning, and earnings-driven optimism points to a high-probability upside breakout scenario. While the stock faces immediate resistance at $339.08, the options market is pricing in a potential surge toward $385, driven by AI-driven demand and robust cash flow generation.

Strategic Imbalance in OTM Options and Sentiment Readings

The options chain reveals a stark imbalance in out-of-the-money (OTM) positioning. For Friday expiration, the $385 call dominates with 16,879 open contracts, nearly triple the next-largest call at $350. This suggests institutional players are hedging for a sharp rally, likely tied to the $10B XPU order and AI revenue tailwinds. Conversely, puts are concentrated at $320 (7,415 OI) and $315 (4,156 OI), indicating downside protection is being bought ahead of the $231.14 200D support level.

The put/call ratio of 0.96 (based on open interest) leans slightly bullish, with calls outnumbering puts by ~4.3%. This aligns with the long-term bullish bias from moving averages (30D at $323.94, 200D at $242.51) and the 67% EBITDA margin highlighted in earnings. However, the MACD histogram (-2.81) and RSI (50.63) suggest near-term consolidation before a breakout.

Block trading activity remains absent, but the heavy call OI at $385 implies a "contingent bullish" strategy: traders are positioning for a move above the Bollinger Upper Band ($381.81) if AI demand accelerates. The risk lies in a pullback below the 30D support ($305.59–$307.19), which could trigger a test of the 200D support ($231.14).Earnings Narrative Validates Options Sentiment

Broadcom’s Q3 results—$15.96B revenue (beating $15.83B estimate) and $1.69 adjusted EPS (vs. $1.65 expected)—validate the bullish options positioning. The 63% AI revenue growth to $5.2B, driven by XPUs and VMware software, directly supports the $385 call thesis. CEO Hock Tan’s $6.2B Q4 AI revenue forecast further amplifies this narrative.

However, the stock’s short-term bearish K-line pattern and MACD crossover below the signal line (9.82 vs. 12.64) suggest volatility ahead. Retail and institutional investors may be hedging against a near-term pullback, hence the heavy put OI at $320. The key question is whether the $336.64 Bollinger Middle Band holds as support/resistance in the coming weeks.

Actionable Trade Setups: Stock and Options

1. Options Play: $385 Call (Friday Expiry)

• Entry: Buy the $385 call if AVGO closes above $339.08 (intraday high) and breaks the Bollinger Upper Band ($381.81).
• Rationale: High open interest at this strike indicates liquidity and institutional conviction. A $340+ close would trigger gamma-driven acceleration.
• Risk: If AVGO fails to hold $333.5 (intraday low), consider closing the position to limit losses.

1. Options Play: $320 Put (Friday Expiry)

• Entry: Buy the $320 put if AVGO drops below $333.5 and tests the 30D support ($305.59).
• Rationale: High put OI at this level suggests a potential short-term floor. The 200D support ($231.14) is a distant risk but unlikely in the near term.

1. Stock Play: Bullish Breakout

• Entry: Buy AVGO at $333.5–$334.5 if the stock holds above the 30D moving average ($323.94).
• Target: $345–$350 (aligns with 100D/200D convergence and AI revenue optimism).
• Stop Loss: Below $328.5 (5% downside from current price).

1. Stock Play: Bearish Contingency

• Entry: Short AVGO at $328.5 if the stock closes below $333.5 for two consecutive sessions.
• Target: $315–$310 (aligns with heavy put OI and 30D support breakdown).
• Stop Loss: Above $334.5.

Volatility on the Horizon: Navigating the AI-Driven Bull Run

The coming weeks will test AVGO’s ability to sustain its long-term bullish trajectory. With Q4 guidance at $17.4B and AI revenue on track to hit $6.2B, the stock’s technicals and options positioning are aligned for a breakout above $340. However, short-term volatility from the MACD divergence and RSI neutrality (50.63) means traders must remain cautious.

Key levels to watch:

• $339.08 (intraday high) as a near-term resistance.
• $381.81 (Bollinger Upper Band) as a psychological threshold for the $385 call.
• $320 (put OI peak) as a potential short-term floor.

For those with a longer-term horizon, the 200D moving average at $242.51 remains a critical support level. A sustained break below this would signal a shift in sentiment, but the current data—especially the earnings beat and AI momentum—strongly favors a bullish bias. Traders should balance aggressive call positioning with defensive put hedges to capitalize on the asymmetric risk/reward profile.