JPMorgan recommends options bet on Broadcom upside ahead of earnings
Broadcom, the Robin to Nvidia’s Batman, is poised to release its third-quarter earnings after the market closes today. Heading into the report, there’s an appealing setup for a short-term options punt, according to JPMorgan equity derivatives strategist Bram Kaplan.
Broadcom’s one-month call skew — in particular, the difference in the implied volatility between call options 5% versus 10% above its current price — is relatively flat, per Kaplan. This makes buying the closer-to-the-money call while selling the more out-of-the-money options a relatively cheaper and more efficient way to express an optimistic view on the stock. And with the options-implied earnings move (6.2%) well shy of what’s been realized over the past four quarters (12.1%) and below the three-year average (7.4%), a derivates bet encompassing earnings doesn’t appear to demand a very expensive premium, he noted.
JPMorgan’s recommended trade:
Buy AVGO 5Sep25 320-330 call spreads for $1.80
Kaplan flagged that JPMorgan analysts covering the stock consider Broadcom their top pick in the semiconductor space, and a better outlook for sales and guidance than consensus heading into earnings.
The Street is looking for Broadcom to report revenues upward of $15.8 billion and adjusted diluted earnings per share of $1.67. Analysts expect the company’s sales guidance for Q4 to be north of $17 billion.
