AVGO Options Signal Bullish Breakout: Calls at $420, Puts at $360 Highlight AI-Driven Momentum

• Broadcom (AVGO) surges 2.8% to $401.34 amid Microsoft chip-design rumors and pre-earnings hype.
• Options data shows heavy call open interest at $420 and $410, with puts clustering at $360 and $320.
• RSI at 69 and bullish Kline patterns suggest AI-driven momentum could push $430+ before earnings.

Here’s the core insight: AVGO’s options market is pricing in a high-probability upside breakout, with call/put balances and technicals aligning for a post-earnings rally. The stock shows clear upside potential but carries near-term volatility risks from earnings and Microsoft-related news.

Betting on the AI Bull Case: Calls vs Puts in the Crosshair

The options chain tells a story of cautious optimism. For this Friday’s expiry (Dec 12), AVGO20251212C420 and AVGO20251212C410 calls dominate with 2,407 and 2,369 open interest, respectively. These strikes act as a magnet—traders are pricing in a 5%+ pop if earnings exceed $1.87 estimates. Meanwhile, puts at AVGO20251212P360 (3,164 OI) and AVGO20251212P320 (2,918 OI) suggest hedgers are bracing for a worst-case 10% pullback. The near-1:1 put/call ratio (1.03) means both bulls and bears are active, but the skew favors a $400+ base.

News That Fuels the Fire: Microsoft, AI, and Earnings

The Microsoft chip-design shift is no small thing. Moving custom work from Marvell to Broadcom could unlock $1–2 billion in incremental revenue—a 5–10% boost to AVGO’s $17.4B Q4 forecast. Combine that with Alphabet’s TPU v6 production and Meta’s AI infrastructure bets, and you’ve got a perfect storm for AI-driven earnings. Analysts aren’t just hopeful: Bank of America and KeyCorp just raised price targets to $460, and Cantor Fitzgerald went all-in at $525. The stock’s 52-week high of $407.29 feels like a floor, not a ceiling.

Trade Ideas: Calls for the Quick Pop, Stock for the Long Game

For short-term traders, AVGO20251212C420 (Dec 12 expiry) is a high-conviction play. At $401.34, this call is just $18.66 out of the money. If earnings beat by 5% (say, $1.95 EPS), the stock could hit $430+, giving this call 50%+ gains. For a safer bet, consider a bull call spread: buy AVGO20251219C420 and sell AVGO20251219C440 (next Friday’s expiry). This caps risk while targeting a $430–$440 move.

Stock buyers should eye $340–$341 (30D support) as a key entry zone. If AVGO dips to that level (a 16% drop from current prices), it’d validate the long-term bullish case. Set a stop-loss below $322 (lower Bollinger Band) and aim for $430 as a first target. The 200D moving average at $275 is a final safety net.

Volatility on the Horizon: Earnings as the Tipping Point

The next 48 hours will be critical. Broadcom’s Q4 report on Dec 11 could either confirm the $525 price targets or trigger a profit-taking selloff. But given the options positioning and news flow, the bias remains firmly bullish. If AI revenue hits $6.5B (JP Morgan’s estimate), the stock could gap up past $430. Traders should watch the AVGO20251219P300 puts (10,253 OI)—if these blow out, it’ll signal panic. Until then, this is a stock on a mission.