$BRCM The Timing Is Impeccable

Option traders are pretty darn smart.  Just look at the action before and after today's $BRCM $AVGO news.  Today someone was grabbing CALL contracts quicker than a FIFA official takes a bribe.

Anyone buying weekly calls before today's viagra candle is sitting on a hefty profit this evening.

Someone woke up this morning and said "Self?  Yes self?  I need to buy and buy and buy some $48 calls on $BRCM, because... a little birdy told me too.  Yes the calls were on sale this morning and the buyers were coming.  But the action really started to heat up just after lunch and minutes before the stock spiked.  It's just efficient news hungry robots I imagine.  Intelligent option traders buying up contracts before people realized the common stock was going to rocket 20% higher.  Yep.  You be the judge.



More from Schaeffers Research....

While a handful of semiconductor stocks are comfortably higher this afternoon, Broadcom Corporation (NASDAQ:BRCM) has left its sector peers in the dust. The security just catapulted to a 14-year high of $56.40 -- and was last seen 16.7% higher at $54.78 -- amid reports that Avago Technologies Ltd (NASDAQ:AVGO) is in talks to buy the firm. Against this backdrop, BRCM calls are flying off the shelves at a rapid-fire rate. 

Specifically, BRCM has seen roughly 51,000 calls cross the tape -- more than five times the intraday norm, and about five times the number of puts exchanged. It looks like bulls are buying to open 55-strike calls in both the weekly 5/29, June, and July series, gambling on an extended climb north of $55 in the near term. What's more, the equity's 30-day at-the-money implied volatility has more than doubled to 54.6% -- an annual high.

Even before today's M&A surge -- which echoes that of Juniper Networks, Inc. (NYSE:JNPR) -- Broadcom Corporation (NASDAQ:BRCM) option traders were betting bullishly. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 8.41 stands higher than 86% of all other readings from the past year.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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