Options Corner: AVGO Earnings Face High Bar

追加: 2026-06-03

[00:00:01]Joining us here in studio, lead market technician for the Schwab Network, Rick DuPree is here. It's options corner time. We're looking at Broadcom. Now, you got a tactical picture you got on your radar here first. So, what stands out?

[00:00:12]>> Yeah, so Broadcom outperforming the tech sector, the XLK ETF, and the broader market, the S&P here of teal and green respectively versus Broadcom in red.

[00:00:22]But, we can also see that kind of underperforming the SMH as a whole. Not really the fairest of comparisons though, given the extreme outperformance of the chips in the memory sector. So, if we were to look more just kind of the the CPU and GPU makers, Broadcom is still a bit of a laggard in this group though. Intel, Marvell, AMD have all seen explosive pushes to the upside. Meanwhile, Broadcom and Nvidia kind of near the back of the pack here.

[00:00:48]When we do look at Broadcom more specifically though, what we see is that we had this decline following our earnings event back in February here, and then a couple quarter and a half or so of falling price activity, successively lower lows. But then, around this point, a very rapid resurgence here. We filled the gap that was formed here near about 394. That gave us a low point that was then established and solidified a couple more times. We had a high point here near 415. In terms of closing prices at least, that was around where price fluctuated pretty often here. So, if we were to kind of distill it down a little bit, 407 to about 438 or so was mostly where we saw this sideways range-bound activity. Another way of looking at it too could have been more of a upward channel type shape here. Either way, we have broken out to the upside. We have a very steep white trend line in play here. We topped out near 488.82.

[00:01:48]Another high point before our gap to the upside that we saw yesterday was 466.

[00:01:54]When we think about our moving averages in this case, Our 5-day EMA in dark blue comes in at a rather interesting point here near about 454 roughly because it lines up with the upper edge of our channel as well as our short-term trend line in white here. That could change a little bit when the market opens, but that could give us a confluence to watch out for. RSI accelerated above the overbought area. 7470 is where we closed yesterday. Often times stocks slow in terms of our momentum activity heading into earnings. So, a bit of an atypical reading there. Some kind of unexpected strength perhaps heading into earnings.

[00:02:31]When we do look at our volume profile study, our range bound area that we highlighted earlier matches up with a pretty large volume node here between about 412 to 434. We're focusing on the past few months only because when you have the whole year when and a very rapid ascent, the more important, more relevant area gets kind of overshadowed by the previous trading activity here.

[00:02:56]So, another smaller node here around where we had our channel beginning near about 370 or so. Volume spikes as well during the past few sessions. So, volume 50% above the 50-day moving average of volume suggests a high conviction on the part of traders.

[00:03:12]>> All right, Rick.

[00:03:14]Let's talk some trading here. You're looking at an example trade. Stock set to gap up a little bit, but what stands out to you in the options world and options example?

[00:03:22]>> So, I was thinking about the June July 17th expiration here, our green box here. So, that's a range of about 84 plus or minus. That gives us a percentage of about 17% plus or minus.

[00:03:35]So, that matches up pretty closely with the lower end of our range that we were discussing here. So, the trade in question for an example, plus or excuse me, minus one July 17th 410 400 put vertical at a $2 credit received. So, selling a put spread, neutral to bullish outlook, 44 days till expiration for this one here. Max profit the credit received that $2 credit equates to $200.

[00:04:00]Max loss will be $400 in this case here.

[00:04:03]So roughly one to four risk reward here.

[00:04:05]So that reflects more of a higher probability type of trade. Certainly not a sure thing or anything like that. But you can see kind of our our shaded area here our expected move and our break even. Break even 408 about 17% downside. Pretty close to our expected move here. So expected move about 17.1%.

[00:04:25]So basically looking for that technical level that we established to hold and also for the to stay within what the the market is looking for in terms of our expected move area here. So this would be a trade where you're kind of just banking on the continued strength in the sector to hold on or at least not dissipate too much if we were to retreat down to to some prior areas of concentration.

[00:04:49]>> Good stuff. Rick DuBuclet we'll look forward to those earnings after the close.