By Investor’s Business Daily
Publication Date: 2025-11-28 18:44:00
Broadcom (AVGO) is due to report earnings Dec. 11 after the market close. The options market is pricing in a 10.1% move in either direction on Broadcom stock.
Let’s analyze how we can structure an option trade that fits the view that one, Broadcom stock will stay within the expected range, and two, the response to the earnings report is likely to be positive.
Broadcom stock has consistently stayed above the lower end of the expected range for the last four earnings announcements.
Taking the at-the-money put and call for the Dec. 12 expiration, we can see that the expected range is 10.1%. Now that we know the expected range, let’s find a bull-put spread that has a break-even price roughly 10.1% below the stock price.
How To Price This Bull Put Spread
Selling the Dec. 11-expiration 355-strike put and buying the 350 put with the same time expiry would create a bull put spread. Further, this spread recently traded for around 85 cents a share. That also means a trader selling…
