Want to play Broadcom earnings (AVGO) ?
Broadcom Has Surprised on Earnings 100% of the Time in the Past 5 Years. If History Repeats, Could the Stock Surge Again?
Another day, another AI and software earnings play…
It seems endless these days, but the reality is that Broadcom is hard to ignore.
The Stock
Broadcom Inc. (AVGO) stands at the forefront of the semiconductor and infrastructure software industries, delivering robust growth over the past five years, fueled by surging demand for AI and cloud solutions.
The company continues to attract investor attention as it secures major partnerships with tech giants like Google and Meta.
While the stock trades at a premium, analysts remain optimistic about AVGO’s long-term prospects
Broadcom reports earnings on Thursday, September 4, after the market closes. Although not quite on the scale of Nvidia, Broadcom has outperformed every other “Magnificent 7” stock over the last five years. Since its acquisition of VMware in 2023, Broadcom has transformed itself into a fully integrated infrastructure software company.
How Does AVGO Perform Around Earnings?
Over the past five years, Broadcom has delivered an earnings surprise 100% of the time. Similar to Nvidia, “surprise” may now be the expectation.
Based on historical data,
Broadcom has a 66.7% chance of trading higher one day after earnings, with an average gain of 6.7% and a maximum one-day move of 24.4%.
One week after earnings, the stock shows a 75% chance of finishing higher, with an average gain of 10.1% and a maximum weekly move of 20.8%.
And one month after earnings, Broadcom has a 66.7% chance of being higher, with an average gain of 12.6% and a maximum monthly move of 24.2%.
Of course, past performance is no guarantee of future results. But if you are of the view that Broadcom (AVGO) can beat earnings or provide positive guidance, triggering a move higher after results, these options plays may be worth considering.
Strategy 1: 1 Week Call Spread
Rationale: A weekly option gives the investor more time to make decisions after earnings, and it gives the market additional time to fully digest the results. As past AVGO earnings have shown, significant moves often occur not just immediately after, but throughout the week following the announcement.
The obvious play is the 5 Sep 315 call priced at $4.65. However, the smarter play is to use a call spread which has a slightly better breakeven, but crucially buys the investor time in which to assess and potentially benefit from a market move. Theta (time decay) and Vega (volatility decay) are less impactful than with options expiring in just two days, especially as implied volatility typically drops sharply after earnings.
This strategy costs approximately 1.5% and offers a potential payoff multiple of 4.34x.
Current Spot: $302.39
Leg 1: Buy 12 Sep 2025 $315 Call at $6.65
Leg 2: Sell 12 Sep 2025 $335 Call at $2.04
Total cost is $4.61 or 1.5% (Cost/Current Price)
Maximum Loss: Equal to the total cost of the spread $4.61
Breakeven: This spread has a breakeven $319.61 or 5.7% higher than its current price.
Ideal Outcome: Stock rallies above the breakeven price, and continues to the strike of the short call, allowing the pull payoff of $20 to be received
Exit Scenarios:
If Broadcom doesn’t perform as expected after earnings and it appears the options will expire out of the money, the investor can close the position for a loss.
If the stock moves significantly higher post earnings, an investor can close the options position early to lock in a profit—though this will likely be less than the maximum possible payoff.
If the stock moves significantly higher post earnings and the investor holds until expiration, as long as the price is above breakeven but below the short call strike, a partial payoff is received (but not the maximum).
Bye for now
The Options Mentors
(Prices are based on the previous day’s closing prices and may not reflect the current price.)
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