AVGO Options Signal $425 Bull Case as Earnings Loom: How to Play the AI-Driven Move

• Broadcom (AVGO) reports Q4 earnings on Dec 11, with options pricing projecting a 6% move to $425 or $377.
• Call/put open interest is nearly balanced (ratio: 1.05), but $420 calls and $320 puts dominate near-term positioning.
• Technicals show a bullish engulfing pattern and overbought RSI (73.7), but Bollinger Bands suggest room to run above $418.

Here’s the takeaway: The options market is hedging for a big earnings swing, but technicals and AI-driven fundamentals lean bullish. If you’re in, target $420 calls expiring Dec 19. If you’re cautious, $400 puts offer downside protection.What the Options Chain Reveals About Market Sentiment

Let’s break down the open interest (OI) data like a chess game. For this Friday’s expirations, $420 calls (OI: 5,998) and $320 puts (OI: 4,851) are the most heavily bet strikes. Next Friday’s OI tells a clearer story: $410 calls (OI: 7,449) and $300 puts (OI: 10,422) show a tug-of-war between bulls and bears.

The near-1:1 put/call ratio for open interest isn’t a red flag—it’s a green light. Traders aren’t leaning heavily one way, but the $420 call wall suggests smart money expects a pop above $425 post-earnings. Meanwhile, the $300 put OI acts as a safety net if AI hype falters. Block trading is quiet, so no whale moves to worry about—yet.

Why Earnings and AI News Matter for AVGO’s Direction

Broadcom’s Q4 results are a $17.48 billion revenue event. Analysts love its XPUs powering AI, but Google’s in-house chips could disrupt margins. Here’s the catch: The stock’s 15% rally in a month has already priced in some optimism. If earnings beat by even 0.5% (like last quarter), the $425 target feels achievable.

But don’t ignore the risks. XPUs eat into gross margins, and VMware integration isn’t seamless. The Street’s $433 average price target is high, but so is the P/E ratio. This is a high-reward, high-risk trade—perfect for options, not all-in stock bets.

Actionable Trade Ideas for AVGO: Calls, Puts, and Price Levels

For options traders, the AVGO20251219C420 call is your best bet. Why? The $420 strike sits just below the Bollinger Upper Band ($418.23), and a pop above $425 would let you ride the wave. If you’re bearish, the AVGO20251219P400 put offers a cheaper hedge—AVGO needs to drop below $400 to justify it.

Stock traders should watch two levels:

• Entry near $399 (intraday low) if support holds.
• Exit at $425 (earnings target) or $430 (Bollinger Band).

A stop-loss below $390 would protect against a breakdown. Remember: This is a short-term play. Ride the earnings pop, then lock in profits.

Volatility on the Horizon: What to Watch Next

Earnings on Dec 11 will be the catalyst. If XPUs deliver $6.2 billion in Q4 revenue (as projected), the $425 level becomes a floor. But if Google’s in-house chips scare investors, the $377 downside target could materialize.

The key is timing. Options expiring Dec 19 give you a buffer to react. For now, the data says bulls have the edge, but don’t ignore the puts—they’re there for a reason. Stay nimble, and let the fundamentals guide your exit.