Broadcom (AVGO) Chart Analyzed, Options Trade Proposed in Wake of Today’s Rally

After Broadcom (AVGO) announced a new $10 billion share repurchase program late yesterday, sparking a rally by the name today, Schwab Network analyzed the stock’s chart and proposed a bullish options trade involving it.

A technician working at a magnified microscope, developing a new integrated circuit.

A Look at AVGO’s Chart

“Broadcom is holding up better than the broader market this year and outperforming its sector,” said Rick Ducat, Schwab’s Lead Market Technician. However, AVGO is below its three main moving averages, while its “exponential moving averages are also trending down,” Ducat said.

AVGO has a “potential support point near $135,” and today’s rally could “set the stage for a new upward trend” by AVGO, Ducat reported.

A Bullish Options Trade

Commentator Tom White proposed an options trade that he said would exploit AVGO’s rally and its relatively high volatility. Specifically, he suggested buying call options with a $165 strike price that expire on May 16, and he proposed selling call options that have a $185 strike price and expire on April 17. The net premium for the options play is $12, he said.

The Recent Price Action of AVGO Stock

In the last month, the stock fell 15%, while the shares have tumbled 30% in the last three months.

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Disclosure: None. This article is originally published at Insider Monkey.