AVGO Options Signal Bearish Call Imbalance at $385–$350: A Strategic Short-Term Play for Volatility-Driven Traders

• Broadcom (AVGO) trades at $333.4, down 0.8% from its $336.1 close, with intraday volatility between $330.58 and $339.08.
• Options data reveals a bearish call imbalance: 16,879 open interest at the $385 strike (this Friday’s expiry) and 7,415 puts at $320, signaling a potential short-term pullback.
• Analyst upgrades (J.P. Morgan, Mizuho) and a $110B AI backlog highlight long-term bullish catalysts, but margin pressures and bearish warnings add near-term uncertainty.

The AVGO options market is flashing a cautionary signal for short-term traders. With a put/call open interest ratio of 0.956 and heavy call OI at $385–$350, the data suggests a bearish near-term bias despite the stock’s long-term bullish technicals. This article unpacks the key drivers and actionable strategies for navigating the coming volatility.

OTM Options Imbalance and Market Sentiment: A Bearish Short-Term Setup

The options chain for AVGO reveals a striking imbalance in open interest (OI) between out-of-the-money (OTM) calls and puts. For this Friday’s expiry, the $385 call (OI: 16,879) and $350 call (OI: 6,634) dominate the call side, while the $320 put (OI: 7,415) and $315 put (OI: 4,156) lead the put side. This distribution indicates a bearish near-term bias, as traders are hedging against a potential pullback below the $330 level (lower Bollinger Band) or a sharp correction from the $339.08 intraday high.

The put/call OI ratio of 0.956 (slightly bearish) further reinforces this narrative. While the long-term moving averages (30D: $323.94, 200D: $242.51) remain bullish, the short-term RSI at 50.63 and MACD histogram (-2.81) suggest overbought conditions are unwinding. Traders are positioning for a potential test of the $315–$320 support zone, where the 30D support level (305.59–307.19) and 200D support (231.14–235.60) converge.

Notably, block trading activity is absent, which means no large institutional trades are currently influencing the options market. This absence could indicate a lack of conviction in either direction, but the heavy OI at key strikes suggests retail and institutional players are preparing for a directional move.

News-Driven Narrative: Bullish Fundamentals vs. Bearish Valuation Concerns

Broadcom’s recent news flow is a mixed bag. On the bullish side, J.P. Morgan and Mizuho have raised price targets to $400, citing a $110B AI backlog and strong Q3 results (revenue: $15.95B, AI segment up 63%). The company’s new AI infrastructure products and custom XPUs also position it as a key player in the $475B AI chip market by 2030.

However, bearish signals are emerging. GuruFocus highlights margin pressures in the AI segment, while a bearish article warns of “peak euphoria” in AVGO’s valuation and insider selling. These risks are amplified by the stock’s current price of $333.4, which is 13% above its 200D MA but 10% below its upper Bollinger Band. The market is pricing in continued AI-driven growth but remains wary of overvaluation and margin compression.

The options data aligns with this duality. Heavy call OI at $385 reflects optimism about hitting the $400 price targets, while the put OI at $320 suggests hedging against a correction. This duality creates a high-probability volatility trade for traders who can navigate the short-term pullback while staying positioned for the long-term AI growth story.

Actionable Trading Opportunities: Short-Term Puts and Long-Term Calls

Options Strategies

1. Short-Term Put Play (This Friday’s Expiry):

• Target Contract: $320 Put (OI: 7,415)
• Rationale: With the stock trading at $333.4 and the 30D RSI at 50.63, a pullback to the $320–$315 support zone is likely. The $320 put offers a 4.3% downside buffer and aligns with the Bollinger Band lower bound ($291.46). If AVGO closes below $330 by Friday, this put could see a 20–30% move.

1. Long-Term Call Play (Next Friday’s Expiry):

• Target Contract: $365 Call (OI: 3,479)
• Rationale: The $365 strike is 9.5% above the current price and sits within the $350–$385 call OI cluster. If AVGO breaks above $339.08 (intraday high) and holds above $336.64 (middle Bollinger Band), this call could benefit from a rebound toward the $385–$400 price targets.

Stock Positioning

• Short-Term Short Entry: Consider a short position if AVGO breaks below $330 (intraday low) with volume above 7.2M. Target $315–$320 as a stop-loss zone.
• Long-Term Buy Entry: If the stock holds above $336.64 (middle Bollinger Band), consider a buy at $330–$333 with a target of $339.08 (intraday high) and a stop at $325.

Volatility on the Horizon: Navigating the AI Growth Paradox

The coming weeks will test AVGO’s ability to balance its AI-driven growth narrative with valuation concerns. The options market is pricing in a $320–$385 volatility range, with key inflection points at $330 (support) and $339.08 (resistance). Traders should monitor the $336.64 middle Bollinger Band as a critical level: a break above could reignite bullish momentum, while a close below $330 would validate the bearish call imbalance.

For those with a longer-term view, the $365–$385 call strikes offer a way to capitalize on the AI backlog and analyst upgrades. However, short-term traders should prioritize the $320 put for a defined-risk play on the near-term pullback. The key takeaway is to stay nimble: AVGO’s trajectory will depend on whether the AI growth story outpaces margin pressures and valuation skepticism.

In the end, the options data and technicals paint a clear picture: AVGO is in a short-term bearish consolidation phase but remains firmly on a long-term bullish trend. The next 10 days will be critical for determining whether the stock can reestablish its upward momentum or succumb to a deeper correction.