Dear Reader,

For today’s Trade of the Day e-letter we will be looking at a monthly chart for Broadcom Inc., stock symbol: AVGO.

Before breaking down AVGO’s monthly chart let’s first review what products and services the company offers. 

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V based products worldwide.

Below is a 10-Month Simple Moving Average chart for AVGO:

Buy AVGO Stock

As the chart shows, in November 2022, the AVGO 1-Month AVGO Price crossed above the 10-Month simple moving average (SMA). 

This crossover indicated the buying pressure for AVGO stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish uptrend.

As you can see the 1-Month Price is still above the 10-Month SMA which means the bullish trend is still in play.

As long as the 1-Month price remains above the 10-Month SMA, the stock is more likely to keep trading at new highs and should be purchased.

Our initial price target for AVGO is 927.26 per share.

Profit if AVGO Is Up, Flat, or Down 7.5%

AVGO stock is still in a 10-month SMA uptrend which makes it a prime buying opportunity. Let’s use the Hughes Optioneering calculator to look at the potential returns for an AVGO call option spread.

The Call Option Spread Calculator will calculate the profit/loss potential for a call option spread based on the price change of the underlying stock/ETF at option expiration. In this example it shows the return from a 7.5% increase to a 7.5% decrease in AVGO stock at option expiration.

The goal of this example is to demonstrate the ‘built in’ profit potential for option spreads and the ability of spreads to profit if the underlying stock is up, down, or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike prices used in the profit/loss calculation.

The prices and returns represented below were calculated based on the current stock and option pricing for AVGO on 6/29/2023 before commissions.

Built in Profit Potential

For this option spread, the calculator analysis below reveals the cost of the spread is $1,285 (circled). The maximum risk for an option spread is the cost of the spread.

The analysis reveals that if the AVGO stock decreases -5%, remains flat, or increases at all at expiration the spread will realize a 55.6% return.

And if the AVGO stock decreases -7.5% at option expiration, the option spread would still make a 39.1% return (circled).

Due to option pricing characteristics, this option spread has a ‘built in’ 55.6% profit potential when the trade was identified*.

Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down, or flat.

A higher percentage of winning trades can give you the discipline needed to become a successful trader.

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade.

Chuck’s $3,000 Trading Scholarship

I don’t want you to miss a single opportunity to potentially reach your goals. That’s why I’d like to offer you a scholarship of the full $3,000 Enrollment Fee of my exclusive Inner Circle Trading Service**.

I want you to follow in my footsteps for the opportunity to succeed beyond your wildest dreams, so please call Brad in my office at 1-866-661-5664 or 1-310-647-5664 and get started today!

You can also CLICK HERE to schedule a call now!

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

Have any questions? Email us at dailytrade@chuckstod.com

*Trading incurs risk and some people lose money trading.

**Inner Circle Trading Service program provides training package and specific trade signals for one year. The first 10 people to sign up each day this offer is valid, will get a waiver of the standard fee, which is the price charged to anyone signing up after the first 10 people per day.