Broadcom Eyes Q3 Earnings Amid Valuation Surge and Options Play

Broadcom (AVGO) is slated to report its third-quarter results after the market closes on Wednesday. With a market capitalization of roughly $1.75 trillion, the chipmaker now exceeds the combined value of Tesla, SpaceX, Eli Lilly and JPMorgan Chase, yet its earnings receive far less media focus than those of Nvidia.

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The prior quarter’s results disappointed investors: the stock slipped nearly 13 % the following day and fell about 23 % over the subsequent month. Analysts attribute the decline to Broadcom’s decision not to raise its 2027 AI-revenue target, which injected “fear” into options pricing. Technically, the shares are consolidating just below the 150-day moving average—a level breached on Aug. 19 after Marvell announced an expanded partnership with Google—while the Commodity Channel Index has turned positive, hinting at underlying momentum.

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Mike Khouw, an options strategist, proposes a moderately bullish structure that exploits elevated implied volatility. He recommends selling an out-of-the-money cash-covered put roughly 10 % below Friday’s closing price and simultaneously selling an upside call spread. The combined credit is about $7 per share—approximately 1.8 % of the current price—and translates to an annualized return exceeding 25 % if the trade holds for the typical four-week horizon. Broadcom’s implied move is estimated at around 8 % by week’s end.

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Khouw warns that a repeat of last quarter’s forward-AI guidance disappointment could trigger another sharp decline, potentially forcing a purchase at roughly $328 per share. Conversely, if the stock remains flat or rallies modestly—mirroring Nvidia’s recent pattern—the rapid post-earnings implied-volatility crush would improve the probability of profit.

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Investors should watch the forward-AI revenue guidance and the immediate post-earnings price action. The success of the suggested options play hinges on whether Broadcom’s share price stays near current levels or experiences a pronounced move, a dynamic that has defined recent semiconductor earnings cycles.

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