AVGO Options Signal Bullish Rebound Potential: Focus on $360 Puts and $370 Calls as AI Backlog Uncertainty Fades

• Broadcom (AVGO) plunges 10.2% to $364.75 amid AI margin concerns but holds above key 30D support at $339.98
• Options market shows 1.03 put/call OI ratio with heavy bearish positioning at $360 puts and bullish buildup at $370 calls
• CEO Hock Tan’s $73B AI backlog warning clashes with $19.1B Q1 2026 revenue guidance creating mixed signals

Here’s what’s happening: AVGO’s 10% intraday drop has created a volatile but potentially lucrative setup. The options market is pricing in a sharp rebound near $360 while also hedging against further declines below $340. This tension between bearish sentiment and technical support levels creates a unique trading window.

The $360 Put Wall and $370 Call Catalyst

Looking at the options chain, the $360P (20251212P360) contract dominates this Friday’s expiring puts with 11,465 open interests—nearly double the next strike. This suggests institutional players are locking in downside protection just below current levels. Meanwhile, next Friday’s $370C (20251219C370) call option sees 12,646 open interests, indicating a quiet but growing conviction that AVGO could rebound above its 200D MA of $279.15.

The absence of block trades is telling. With no large institutional orders skewing the data, we’re seeing organic positioning: bears are hedging at $360 while bulls are quietly accumulating calls at $370. The danger? If AVGO breaks below $341.44 (30D support), the $350P (20251219P350) strike with 6,388 OI could trigger a cascade of stop-loss orders.

AI Backlog Drama vs. Earnings Power

Broadcom’s $73B AI backlog is both a blessing and a curse. While CEO Hock Tan calls it a "minimum" over six quarters, the market is punishing near-term margin concerns. But remember: this is the same company that generated $43B in annual EBITDA and $26.9B free cash flow. The $19.1B Q1 2026 guidance implies sequential growth despite the AI headwinds.

Investor psychology is key here. The stock’s 8.3% after-hours drop shows impatience with long-term AI timelines. But cash flow kings like Broadcom often see rebounds when short-term fears peak. Think of it like a rubber band: the further it stretches below intrinsic value, the sharper the snapback can be.

Actionable Trade Ideas for AVGO

For options traders:

• Bullish Play: Buy the $370C (20251219C370) if AVGO closes above $368 by Friday. The 12,646 OI suggests a potential short-covering rally.
• Bearish Hedge: Buy the $360P (20251212P360) for Friday expiration if price tests $363.26 (intraday low). This strike has 11,465 OI as a liquidity magnet.

For stock traders:

• Entry near $341 if AVGO holds above 30D support ($339.98–$341.44). Target $375 if the 20D EMA ($370.23) holds.
• Short at $338.30 if the 200D support ($338.299–$343.63) breaks. Stop loss above $345 to protect against a rebound.

Volatility on the Horizon

The next 72 hours will be critical. If AVGO closes above $370 by Dec 19th, the $400C (20251219C400) with 9,539 OI could become a catalyst. But a close below $340 would validate the $350P (20251219P350) as a new short-term floor. Either way, the options market has priced in a sharp directional move—now it’s about timing the catalyst.

This is a stock at a crossroads: AI optimism vs. margin realism. The technicals and options data suggest a rebound is more likely than a prolonged selloff, but patience will be rewarded. As always, keep position sizes tight and let the charts guide your entries.