Broadcom (AVGO) Options Signal Bullish Setup at $350 as AI Backlog Drives Volatility — Here’s How to Play It

• Broadcom surges 1.14% to $346.94, trading above its 30D MA of $356.66 but below key resistance at $348.63.
• Options market shows heavy call open interest at $350 (next Friday’s expiry) and bearish block trades on $350 puts expiring in February.
• Wells Fargo upgrades AVGO to "Overweight" with a $430 price target, citing $73B in AI-related orders and 116% YoY revenue growth.

Here’s the core insight: Broadcom’s options activity and technicals point to a high-probability bullish breakout scenario, but with a critical short-term support level to watch. The stock is perched at a crossroads—AI-driven optimism clashes with valuation concerns and insider selling. Let’s break it down.

The Options Imbalance: Calls at $350 Signal Conviction, Puts Hint at Hedging

The options chain tells a story of divided sentiment. For next Friday’s expiry (Jan 23), the AVGO20260123C350 call option has 3,073 open contracts—the highest among OTM strikes. This suggests traders are pricing in a potential push above $350, which aligns with Wells Fargo’s upgraded price target. Meanwhile, the AVGO20260123P320 put option (OI: 6,249) shows heavy hedging activity, likely from investors protecting against a pullback below the 200D MA of $297.15.

But here’s the twist: Block trades on AVGO20260220P350 puts (sold for $798K and $792K) indicate large players are aggressively shorting downside risk. This could mean two things: either they expect a sharp correction before February or they’re locking in profits after the recent 58% 12-month rally. For retail traders, this creates a high-risk/high-reward asymmetry—if the stock breaks $350, the calls could explode in value, but a drop below $328.87 (lower Bollinger Band) would validate the puts.

News Flow: AI Backlog is a Double-Edged Sword

The recent upgrades from Wells Fargo and RBC Capital are no accident. Broadcom’s $73B AI order backlog—driven by Google partnerships and Alphabet contracts—is a tailwind. But Zacks’ "Hold" rating and RBC’s cautious stance highlight a reality: the stock’s 15.93 P/S ratio is a magnet for profit-taking. The key question is whether the market will treat this as a "buy-the-dip" opportunity or a valuation trap. Institutional investors are split—UBS added 31.4M shares, while Capital World cut its stake by 8.6%. This mixed activity suggests the stock is in a consolidation phase, with the next move likely hinging on Q4 earnings (if not already priced in).

Actionable Trade Ideas: Calls at $350, Puts at $320, and a Core Position at $348

For options traders:

• Buy AVGO20260123C350 calls if the stock breaks above $348.63 (30D support/resistance). Target a 15–20% move to $380 by expiry.
• Sell AVGO20260123P320 puts if the price dips to $338.30 (200D support). This creates a collar if you’re bullish long-term but want to average down.

For stock traders:

• Enter a core position near $344.05 (intraday low) if the RSI (44.56) holds above 40. Set a tight stop-loss at $338.30.
• Target $353.23 (intraday high) as a short-term ceiling; break above that, and re-evaluate for a move toward $360.

Volatility on the Horizon: Balancing Bullish Catalysts and Bearish Risks

The next two weeks will be critical. If Broadcom’s AI revenue growth outpaces NVIDIA’s Blackwell launch (February 2026), the stock could surge. But watch for insider selling to accelerate—a $284M exit in three months isn’t trivial. The options market is pricing in a 10–15% move by January 23, so position sizing matters. Play this like a chess game: use the $350 calls as your queen, but keep a shield of $320 puts ready if the pawns (technical indicators) start to crumble.

In the end, Broadcom is a stock caught between AI euphoria and valuation reality. The options data and news flow give us a roadmap—now it’s up to the market to choose its path.