Signal: This Semiconductor Stock Has Room To Run

Core Viewpoint - Broadcom (AVGO) has experienced significant stock movement, reaching a market cap of $1 trillion and a record high of $265.43, but faced a 5% drop following a revenue forecast that fell short of estimates. The stock has since rebounded and is showing historically bullish signals [1][2]. Stock Performance - The stock's recent peak coincides with historically low implied volatility (IV), which has previously indicated bullish trends for the equity. Currently, AVGO's Schaeffer's Volatility Index (SVI) is at 32%, placing it in the bottom percentile of its 12-month range [2]. - Historical data indicates that Broadcom stock has risen 75% of the time one month after trading within 2% of its 52-week high, averaging a 3% return during that period. A similar increase from the current level would position AVGO at approximately $264 [3]. Support Levels - The $250 level is identified as a potential support area, having previously served as a peak in December and January. Additionally, the ascending 20-day moving average may provide short-term support, as it has not been breached on a closing basis since April [4]. Options Activity - There has been a notable increase in the popularity of puts in the options market, with Broadcom's 50-day put/call volume ratio at 0.59, ranking higher than 91% of readings from the past year. This suggests a rising trend in put activity, despite calls still outnumbering puts [5]. - The Schaeffer's Volatility Scorecard (SVS) for AVGO is high at 84 out of 100, indicating that the stock has historically exceeded volatility expectations, which is favorable for options buyers [6].