Broadcom Plunges 2.7% Amid Trump Tariff Fears and Sector-Wide Jitters – What’s Next for AVGO?

Summary
• Broadcom (AVGO) tumbles 2.7% to $302.77, breaking below its 52-week low of $134.90
• Sector-wide semiconductor jitters escalate as Trump threatens 300% tariffs on chips
• Options chain shows aggressive short-term bearish positioning with 1,770,339 contracts for the 307.5 call option
• Intraday volatility widens as AVGO trades between $299.76 and $311.50, signaling heightened uncertainty

Broadcom’s sharp intraday decline has ignited a firestorm in the semiconductor sector, with investors scrambling to parse the implications of Trump’s looming tariff threats and regulatory scrutiny. The stock’s 2.7% drop to $302.77—a level not seen since early 2024—has triggered a cascade of options activity and forced a reevaluation of long-term growth narratives. With the sector’s fate hanging in the balance, traders are now pivoting to defensive strategies as the market grapples with the intersection of geopolitical risk and AI-driven demand.

Trump’s Tariff Threats and Regulatory Scrutiny Spark Flight to Safety
Broadcom’s intraday selloff is directly tied to President Trump’s escalating rhetoric on semiconductor tariffs, with the former president now threatening 300% levies on chip imports. This follows a pattern of aggressive protectionist measures, including a 100% tariff on semiconductors announced last week, which explicitly exempted companies that relocate manufacturing to the U.S. The sector has been on edge since the Commerce Department’s April investigations into national security risks, which paved the way for Trump to impose tariffs. Compounding the issue, recent news of Chinese regulators demanding tech giants justify purchases of Nvidia’s H20 chips has amplified fears of a global regulatory crackdown. Broadcom, as a key player in AI infrastructure, is particularly vulnerable to these cross-border tensions, prompting a flight to safety among investors.

Semiconductor Sector Volatility Intensifies as Intel Surges on Trump-Backed Investment Hopes
While Broadcom’s shares plummet, the broader semiconductor sector remains a mixed bag. Intel (INTC) has surged 6.6% on speculation that the Trump administration may take a direct stake in the chipmaker, offering a stark contrast to AVGO’s woes. This divergence highlights the sector’s bifurcation: companies perceived as aligning with U.S. manufacturing goals are gaining traction, while those exposed to global supply chains face headwinds. The Nasdaq Semiconductor Index has dipped 0.37%, reflecting the sector’s fragility amid regulatory uncertainty. Investors are now closely watching how Trump’s policies will differentiate between domestic champions like Intel and international players like Broadcom.

Navigating the Volatility: ETFs and Options for a Bearish-to-Neutral Outlook
• 200-day average: $220.19 (well below current price)
• RSI: 65.43 (neutral but trending lower)
• MACD: 9.81 (bullish but weakening)
• Bollinger Bands: $276.90 (lower band) vs. $315.85 (upper band) — price near lower band
• Gamma: 0.022974 (high sensitivity to price swings)
• Theta: -0.850640 (rapid time decay)

Technical indicators suggest a short-term bearish bias, with AVGO trading near its 200-day moving average and RSI indicating potential overbought conditions. The Bollinger Bands show the stock is near the lower boundary, hinting at a possible rebound. However, the high gamma and theta values underscore the urgency for options traders to act quickly. Given the sector’s regulatory risks and Trump’s tariff threats, a defensive strategy favoring bearish options is warranted.

Top Option 1: AVGO20250822C305
• Type: Call
• Strike Price: $305
• Expiration: 2025-08-22
• IV: 37.25% (moderate)
• Leverage Ratio: 60.34% (high)
• Delta: 0.4238 (moderate)
• Theta: -0.9468 (high time decay)
• Gamma: 0.023581 (high sensitivity)
• Turnover: 1,124,521 (liquid)
• Payoff (5% downside): $0.00 (strike above current price)

This call option offers aggressive leverage for a potential rebound, with high gamma and moderate delta making it responsive to price swings. The high theta, however, means time decay is a risk if the stock doesn’t move quickly.

Top Option 2: AVGO20250822C307.5
• Type: Call
• Strike Price: $307.5
• Expiration: 2025-08-22
• IV: 36.69% (moderate)
• Leverage Ratio: 76.03% (very high)
• Delta: 0.3646 (moderate)
• Theta: -0.8506 (high time decay)
• Gamma: 0.022974 (high sensitivity)
• Turnover: 1,770,339 (highly liquid)
• Payoff (5% downside): $0.00 (strike above current price)

This contract provides the highest leverage ratio among the options, ideal for a sharp rebound. The high gamma ensures it reacts swiftly to price changes, though the high theta necessitates a quick move.

Trading Outlook: Aggressive bulls may consider AVGO20250822C307.5 into a bounce above $310, while defensive traders should monitor the $296.38 (middle Bollinger Band) for a potential support test.

Backtest Broadcom Stock Performance
The backtest of Broadcom Inc. (AVGO) after a -3% intraday plunge shows favorable performance outcomes. The 3-Day win rate is 58.16%, the 10-Day win rate is 63.27%, and the 30-Day win rate is 77.21%, indicating that the stock tends to recover and even exceed its previous levels in the short term following the intraday plunge. The maximum return during the backtest period was 19.07%, which occurred on day 59, suggesting that there is potential for significant gains in the days following the initial drop.

Sector Turbulence and Trump’s Tariff Gambit: What’s Next for AVGO?
Broadcom’s 2.7% intraday drop underscores the semiconductor sector’s vulnerability to geopolitical and regulatory headwinds. While technical indicators suggest a short-term bearish bias, the stock’s proximity to key support levels and high gamma options present opportunities for strategic entries. Investors should closely monitor Trump’s tariff announcements and sector-specific news, particularly as Intel’s 6.6% surge highlights the administration’s preference for domestic manufacturing. For now, the $296.38 middle Bollinger Band and $276.90 lower band are critical levels to watch. If AVGO breaks below $296.38, the 280-strike put options could see renewed interest. Aggressive bulls may consider AVGO20250822C307.5 for a rebound above $310, but caution is warranted given the sector’s regulatory uncertainty. Watch for $310 breakdown or regulatory reaction.