$AVGO Options Intelligence

🎯 SELL AVGO DEC 19 360/370 CALL SPREAD

I recommend a bear call spread because the term structure shows elevated implied volatility (IV) with near-term expirations overpriced relative to historical norms, and the stock is trading below its 20-day and 50-day moving averages, indicating short-term technical resistance. The current IV rank is 100%, favoring premium selling strategies. Additionally, the next earnings on December 11, 2025, are only 24 days away, adding event premium to options expiring after earnings. Given the stock price at $340.98, selling a call spread above current price captures premium with limited risk if AVGO fails to rally above resistance.

Sell AVGO Dec 19 360/370 Call Spread
Stock Price: $340.98 | Entry: Sell 360 Call @ ~$5.00, Buy 370 Call @ ~$2.50 → Net Credit ≈ $2.50

📊 Trade Metrics

• Max Risk: $7.50 (width of spread $10 - credit $2.50)
• Max Reward: $2.50 (net credit received)
• Breakeven at Expiry: $362.50 (360 strike + $2.50 credit)
• Probability of Profit: Moderate to high (stock needs to stay below $360)
• Days to Expiration: 32 (after earnings, capturing event premium)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Historical Volatility: 44.8%
• Dec 19 Clean IV: ~53.4% (above baseline by ~8.6%, indicating overpriced options)
• IV Rank: 100% (very high, favors selling premium)
• Earnings Multiplier: 2.22x (moderate event premium priced in)
• Calendar Opportunity: Strong IV skew between near-term and longer-term expirations, favoring selling near-term premium
• Put/Call Volume Ratio: 0.05 (very bullish call buying), but IV and technicals suggest resistance near 360-370

📈 Greeks & Volatility

• Delta (360 Call): ~0.359 (out of the money, moderate risk)
• Theta: Positive for seller, benefits from time decay
• Vega: Negative for seller, benefits if IV contracts after earnings
• Current IV: 50.7% (elevated vs historical 32.2%)
• RSI: 44.36 (neutral, no strong momentum)
• Price below 20-day MA (355.80) and 50-day MA (348.99), indicating resistance

🎯 Why This Trade

The term structure reveals a compelling premium selling opportunity: the Dec 19 options have a clean IV roughly 8.6% above the 90-day baseline volatility, indicating overpriced calls. With the stock trading at $340.98, selling a call spread at 360/370 captures this premium while limiting risk. The stock’s technicals show resistance near the 50-day MA at $348.99 and 20-day MA at $355.80, making a rally above 360 less likely in the short term. The upcoming earnings on December 11 add event premium, justifying selling options expiring after that date. The expected daily move is ±$10.88 (3.19%), so strikes 20-30 points out of the money provide a buffer. The put/call volume ratio at 0.05 signals heavy call buying, but the IV and technicals suggest a cautious approach on upside risk.

📊 Pro Analysis

• Current IV: 50.7% vs Historical: 32.2% (IV Rank 100%) strongly favors selling premium
• Expected Daily Move: ±$10.88 (3.19%) supports selecting strikes well above current price
• Market Maker Max Pain: $400, but resistance and technicals suggest profit taking before then
• Technical: RSI neutral, price below 20/50-day MAs, indicating short-term bearish pressure
• Dividend yield: 0.69% (minor impact on option pricing)
• Sector peers (NVDA, AAPL) showing mixed momentum, no strong sector catalyst today

🔍 Earnings Date Check

Earnings on December 11, 2025; recommended expiration December 19, 2025, which is AFTER earnings to capture event premium.

💡 Trade Management

• Entry: Place limit order to SELL 360 Call at $5.00 and BUY 370 Call at $2.50 for net credit $2.50
• Target: Close at 50% of max profit ($1.25) for early exit or hold to expiration for full credit
• Stop: Buy back spread if AVGO rallies above $365 to limit losses
• Time Stop: Close 2 days before expiration if spread still open

📅 Market Overview

The market on November 17, 2025, shows Broadcom trading near $341, below its 20-day and 50-day moving averages, with RSI neutral at 44.36. The semiconductor sector is mixed, with no major news catalysts today. Broadcom’s fundamentals remain strong (EPS $4.03, profit margin 31.6%), but valuation models suggest the stock is somewhat overvalued near current levels. Elevated IV (50.7%) and IV Rank of 100% reflect anticipation of earnings volatility and recent AI-related growth enthusiasm. The Fed’s current stance and upcoming economic events (NFP and CPI on December 5 and 10) add macro uncertainty, favoring defined-risk premium selling strategies over outright long premium. The dividend yield of 0.69% is modest and does not strongly affect option pricing.

🔒 Pricing Validation

• 360 Call intrinsic value: MAX(0, 340.98 - 360) = $0 (OTM) trading near $5.00, above intrinsic ✅
• 370 Call intrinsic value: $0 (OTM) trading near $2.50, above intrinsic ✅
• Put-call parity holds within tolerance
• Spread pricing logical: Debit spread width $10, credit $2.50, max risk $7.50 ✅

Confidence level: Moderate to High — The trade aligns well with current elevated IV, technical resistance, and earnings timing. Risk is defined and limited by the spread width. The main risk is a sharp rally above 370, which is unlikely given current technicals and expected move but must be monitored.

This trade offers a favorable risk/reward profile by collecting premium in an environment of high implied volatility and neutral-to-bearish short-term technical signals.