AVGO Deep ITM Call Buy - $25M Institutional Move
$25M institutional position detected on AVGO. Someone just dropped $25 MILLION on deep in-the-money Broadcom calls...
📅 October 27, 2025 | 🔥 Unusual Activity Detected
🎯 The Quick Take
Someone just dropped $25 MILLION on deep in-the-money Broadcom calls expiring in just 4 days! This massive institutional trade (5,500 contracts at the $315 strike) came through at 13:27:09 today while AVGO was trading at $359.78. With the OpenAI chip partnership driving momentum and earnings coming December 11th, this looks like smart money positioning for continued AI infrastructure dominance. Translation: Big players are loading the boat ahead of catalysts!
📊 Company Overview
Broadcom Inc. (AVGO) is a global semiconductor and infrastructure software powerhouse with:
- Market Cap: $1.67 Trillion
- Industry: Semiconductors & Related Devices
- Employees: 37,000
- Primary Business: The company designs semiconductors for computing, connectivity, and wireless applications, while also providing virtualization, infrastructure, and security software to enterprises and governments through its VMware acquisition.
Broadcom evolved through major consolidation, combining legacy Broadcom, Avago Technologies, VMware, Brocade, CA Technologies, and Symantec into one AI infrastructure giant.
💰 The Option Flow Breakdown
The Tape (October 27, 2025 @ 13:27:09):
| Time | Symbol | Side | Buy/Sell | Type | Expiration | Premium | Strike | Volume | OI | Size | Spot | Option Price |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 13:27:09 | AVGO | MID | BUY | CALL | 2025-10-31 | $25M | $315 | 5.5K | 5.6K | 5,500 | $359.78 | $45.43 |
🤓 What This Actually Means
This is a deep in-the-money call purchase - a sophisticated institutional maneuver! The trader:
- Paid $25M in premium to buy 5,500 contracts at the $315 strike
- Strike is $44.78 deep in-the-money (stock at $359.78 vs $315 strike)
- Expiration is October 31, 2025 - just 4 days away at time of trade
- Volume of 5.5K nearly matches the 5.6K open interest, meaning fresh positioning
- Option priced at $45.43 with $44.78 of intrinsic value (only $0.65 time premium!)
What's really happening here?
This type of trade is typically one of these scenarios:
- Synthetic long stock position - Getting stock-like exposure with leverage and defined risk
- Delta hedging strategy - Part of a larger position management operation
- Rolling from existing position - Moving up from lower strikes or out in time
- Pre-earnings accumulation - Building position before December 11th catalyst
The extremely high delta (~0.95+) means this moves nearly dollar-for-dollar with the stock. With minimal time premium ($0.65), the trader is essentially paying a tiny premium to control $19.8M worth of shares with just $2.5M (if using 10:1 leverage analogy).
Unusual Score: 🏢 Size of a small hedge fund position - This is institutional-grade capital deployment!
📈 Technical Setup / Chart Analysis
YTD Performance Chart
Broadcom is absolutely crushing it this year with +54.74% YTD performance, massively outperforming the broader market! The stock has been in a powerful uptrend since the VMware integration progress and AI chip partnerships.
Key observations:
- Explosive momentum: Up from $233 at year start to current $361 levels
- Recent breakout: Trading at all-time highs near $363
- Strong volume: Institutional accumulation visible throughout the year
- AI narrative driving: OpenAI partnership announcement on October 13th added fuel to the rally
The technical setup shows a stock in full bull mode with strong support building at each consolidation level.
Gamma-Based Support & Resistance Analysis
Current Price: $361.21
The gamma chart reveals critical levels that explain where market makers and institutions are positioned:
🔵 Put Gamma Support Levels:
- $360: Strongest immediate support (7.11B net GEX) - just pennies below current price!
- $350: Secondary floor (6.28B net GEX) at -3.1% down
- $340: Major support (0.70B net GEX) at -5.9% down
- $330: Deep support (1.01B net GEX) at -8.6% down
🟠 Call Gamma Resistance Levels:
- $367.50: Strongest resistance (13.28B net GEX) at +1.7% up - this is the WALL!
- $370: Secondary ceiling (7.72B net GEX) at +2.4% up
- $380: Major resistance (7.99B net GEX) at +5.2% up
- $400: Psychological barrier (6.93B net GEX) at +10.7% up
Key Insight: The stock is trading RIGHT AT the strongest support level ($360) with massive resistance just $6 above at $367.50. This creates a tight trading range where market makers will defend these levels aggressively. The net GEX bias is bullish with total call gamma at 131.3B vs put gamma at 54.5B!
🎪 Catalysts
🔮 Upcoming Events
OpenAI Custom AI Chip Partnership - Deployment Starting H2 2026
- 10-gigawatt custom AI accelerator deal announced October 13, 2025
- OpenAI designing custom chips with Broadcom developing and deploying them
- Systems built entirely on Broadcom's Ethernet networking technology
- Estimated $70-90 billion in revenue potential according to J.P. Morgan
- Timeline: Deployment from H2 2026 through end of 2029
Q4 FY2025 Earnings - December 11, 2025
- Consensus revenue estimate: $17.4 billion (up 24% YoY)
- Consensus EPS estimate: $1.86 (range: $1.73-$1.96)
- Focus on AI semiconductor revenue which hit $5.2B in Q3 (+63% YoY)
- Q4 AI revenue guidance: $6.2 billion
Next-Generation 3nm XPU Launch - Late FY2025
- Advanced 3-nanometer custom accelerators rolling out
- Hardware-software co-optimization for hyperscaler workloads
- Competitive advantage through multi-generation roadmaps
FY2026 AI Revenue Target
- Management expects AI revenue to reach $39 billion in FY2026
- FY2027 serviceable addressable market (SAM): $60-90 billion for XPUs and networking
- J.P. Morgan's forecast: $100 billion annual AI revenue by 2027 achievable
✅ Recently Completed
VMware Integration Success
- Q3 2025: VMware contributed $6.8 billion in sales (up 17% YoY) with 93% gross margins
- FY2024: Infrastructure software revenue surged 196% YoY to $21.5 billion
- VMware Cloud Foundation 9.0 positioned for private cloud and AI infrastructure
NVIDIA Blackwell Integration Announcement
- VMware Explore 2025: Integration with NVIDIA Blackwell GPUs announced
- Enabling enterprises to deploy cutting-edge AI servers within private clouds
- Strengthens position in enterprise AI infrastructure
Wi-Fi 8 Platform Adoption in 2025
- Widespread adoption of Broadcom's Wi-Fi 8 platform
- Positive catalyst for connectivity business segment
🎯 Price Targets & Probabilities
Based on gamma levels, technical setup, and upcoming catalysts:
🚀 Bull Case (40% chance)
Target: $380-$400
How we get there:
- Breaks through the $367.50 gamma resistance wall
- Strong Q4 earnings with AI revenue exceeding $6.2B guidance
- Additional hyperscaler custom chip deal announcements
- 3nm XPU launch receives positive customer feedback
Gamma path: $367.50 → $370 → $380 → $400
Catalyst timing: December 11th earnings could be the trigger
What this means for the trade: The deep ITM calls would be worth $65-85 at these levels, generating $10M-$22M profit on the $25M investment (40-88% gain)
😐 Base Case (45% chance)
Target: $355-$375 range
How we get there:
- Stock consolidates in current gamma support/resistance zone
- Q4 earnings meet expectations without major surprises
- Market digest OpenAI partnership implications
- Slight pullback to $355 support then rally to $375
Gamma path: Oscillation between $360 support and $367.50 resistance
Catalyst timing: Range-bound until December earnings
What this means for the trade: Calls worth $40-60, roughly breakeven to small profit scenario as time value decays while stock trades sideways
😰 Bear Case (15% chance)
Target: $330-$350
How we get there:
- Broader semiconductor sector weakness
- Q4 earnings disappoint on VMware integration costs
- Hyperscaler capex slowdown concerns emerge
- Profit-taking after huge YTD run (+54.74%)
Gamma path: Break below $360 support → $350 → $340 → $330
Catalyst timing: Macro deterioration or unexpected earnings miss
What this means for the trade: Calls worth $15-35, representing $5M-$16M loss on the $25M position (20-64% drawdown)
💡 Trading Ideas
🛡️ Conservative: Ride the Range
Play: Bull put spread (Nov 15th expiration)
Risk: $1,000 per spread max loss
Reward: $200-300 credit per spread
Probability: High - selling puts at major gamma support
Why this works: The $350 level has massive put gamma support (6.28B GEX). Even if stock pulls back from current $361, it's likely to find a floor at $350 before December earnings.
⚖️ Balanced: Follow the Smart Money
Play: Diagonal call spread (Buy Dec, Sell Nov)
Buy Dec $360 calls, sell Nov $370 calls
Risk: Net debit paid (around $8-12 per spread)
Reward: Profit if stock rises modestly and volatility stays elevated
Time decay: Works in your favor as you sell nearer-term premium
Why this works: Positions for the December earnings catalyst while generating income from November expiration. The $360/$370 strikes bracket the current gamma zone perfectly.
🚀 Aggressive: Leverage the AI Momentum
Play: Call ratio spread (Dec expiration)
Buy 2x Dec $365 calls, sell 1x Dec $380 call
Risk: Unlimited above $395 breakeven, but capped profit zone $365-$380
Reward: Maximum profit if stock lands at $380 by December expiration
Leverage: 2:1 ratio gives you amplified gains in the target zone
Why this works: If the OpenAI partnership momentum continues and December earnings beat, the stock could easily push to $380 (the major gamma resistance). This structure profits from that exact scenario.
⚠️ Risk Factors
📉 Valuation Stretched
- Forward P/E of 80-92x is elevated even for AI plays
- AMD trades at 104x and ARM at 193x, but still leaves little room for error
- Any earnings miss could trigger sharp correction
🎯 Customer Concentration
- AI revenue heavily dependent on 3 hyperscale customers (Google, Amazon, Meta suspected)
- If any single customer reduces orders, revenue could swing dramatically
- Currently 4 additional prospects in development for custom XPUs
🤖 Competition Intensifying
- NVIDIA dominates AI chip market with GPUs
- AMD gaining share with MI300 series
- Custom chip customers might eventually bring design in-house (like Apple did)
💼 VMware Integration Risks
- Customer exodus due to controversial 500% price increases
- Shift to subscription licensing creating near-term friction
- Long-term success depends on customer retention
🌊 Semiconductor Cycle
- Industry is cyclical - current AI boom could moderate
- Hyperscaler capex decisions drive Broadcom's revenue
- Any pullback in datacenter spending would hit hard
📊 Technical Resistance
- Trading near all-time highs with minimal overhead supply
- $367.50 gamma wall is significant obstacle
- Failure to break through could trigger profit-taking
🏁 The Bottom Line
Real talk: This $25M deep ITM call purchase is institutional smart money positioning ahead of multiple catalysts. The trade structure (minimal time premium, high delta, short-term expiration) suggests sophisticated operators who expect Broadcom to hold current levels or push higher into year-end.
The setup is compelling:
✅ OpenAI partnership worth potentially $70-90B over time
✅ AI revenue growing 63% YoY and targeting $39B in FY2026
✅ VMware integration succeeding with 93% margins
✅ December 11th earnings catalyst approaching
✅ Gamma support RIGHT at current price ($360 level)
✅ Net bullish GEX bias (131.3B call vs 54.5B put gamma)
But watch out for:
❌ Valuation at 80x+ forward P/E is rich
❌ $367.50 resistance wall will be tough to crack
❌ Any disappointment could trigger fast reversal
❌ Customer concentration risk in AI business
If you own AVGO: Hold through December earnings but consider trimming above $380 if we get there. The gamma resistance is real.
If you're watching: Look for entry on any pullback to $350 (major gamma support). That's where the next institutional buyers will step in.
If you're bullish: Use spreads to define risk given the stretched valuation. Don't chase at current levels - wait for either a dip to $355-360 support or a confirmed breakout above $370.
Mark your calendar: December 11th earnings will determine if AVGO can break out to new highs or consolidates the massive YTD gains. The Q4 AI revenue guidance of $6.2B is the number to watch!
Disclaimer: Options trading involves substantial risk of loss. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. Always do your own due diligence and consider your risk tolerance before trading.
About Broadcom: Broadcom is a $1.67 trillion semiconductor and infrastructure software leader that designs chips for computing, connectivity, and wireless applications while providing virtualization and security software through VMware. The company is positioned at the center of the AI infrastructure buildout with custom chip partnerships and networking solutions for hyperscalers.