AVGO Options Signal $420 Bullish Bias: Here's How to Position for Earnings Volatility

• Broadcom (AVGO) trades at $406.04, down 1.68% from its 52-week high of $412.97
• Options market shows 1.04 put/call OI ratio with heavy call interest at $420 and $450 strikes
• Earnings report after hours Thursday could trigger 6-7% volatility, per options implied move

The stock is dancing on a tightrope right now. Technicals whisper bullish momentum while options data hints at a tug-of-war between cautious optimism and defensive positioning. Let’s break down why $420 is the strike to watch and how to play this earnings week setup.

Bullish Pressure at $420, Bearish Safeguards at $320

Looking at the options chain, the most telling story is the concentration of open interest. For this Friday’s expirations, 5,865 contracts are parked at the $420 call strike—nearly double the next highest call at $500. That’s not just noise; it’s institutional money betting on a post-earnings pop. Meanwhile, the $320 put strike has 4,829 open contracts, acting like an insurance policy for a potential 24% drop from current levels.

The next Friday options amplify this tension. The $410 call (7,301 OI) and $300 put (9,958 OI) form a wider bracket, suggesting some players are hedging for longer-term volatility. With block trading absent, this looks like a retail/institutional split: big money is hedging downside while smaller players are stacking up for a short-term rally.

Earnings Narrative Validates Options Sentiment

Broadcom’s Q4 report isn’t just another earnings call—it’s a referendum on its AI infrastructure bets. The $440 price target from Rosenblatt analyst Kevin Cassidy isn’t arbitrary. With TPU/XPU traction accelerating and VMware cloud adoption gaining steam, the stock’s fundamentals align with the call-heavy options positioning.

But don’t ignore the bears. That $320 put strike isn’t just a random number—it’s 20% below today’s price. If management guides conservatively on AI revenue or VMware adoption, the stock could gap down. The key is whether CEO Hock Tan confirms the $6.2B AI segment forecast. A miss here would validate the put buyers’ hedges.

Actionable Trade Setups for Earnings Week

For options traders, the most compelling plays are:

• AVGO20251219C410 Call (next Friday expiry): 7,301 OI shows strong liquidity. If the stock pops above $406.44 (today’s high), this strike could catch a post-earnings pop. Target $430+ if AI guidance is strong.
• AVGO20251219P300 Put (next Friday expiry): 9,958 OI offers downside protection. Buy this if the stock breaks below $394.19 (intraday low) and holds above $380 (200D support level).

Stock traders should consider:

• Entry near $394 if support holds. Target $420 (key call strike) with a stop below $380.
• Short-term scalp: Buy on a break above $406.44 with a tight stop at $404.93 (today’s open). Exit at $410 to lock in 1%+ gains.

Volatility on the Horizon

This is a classic earnings-week scenario: options buyers are pricing in a 6-7% move, and the stock’s technicals are primed to react. The 30D moving average at $369.55 acts as a floor, while the 200D line at $338.30 is a distant concern. For now, the battle is between $394 and $420. Position accordingly—because when Hock Tan speaks Thursday night, AVGO could swing like a pendulum.

One final thought: The RSI at 72.23 isn’t screaming overbought yet, but it’s creeping toward that zone. If the stock rallies 5% before earnings, that $420 call could become a lottery ticket. But if it dips below $390, those puts at $320 suddenly look like a genius move. This is your chance to pick a side—or hedge both.