Cheaper and Easier Options Trading in Broadcom Stock (AVGO) Unlocking Opportunities: Trading Options in Broadcom Stock after the 10-for-1 Split

Photo of author

By Ronald Tech

Revolutionizing Options Trading

Following the 10-for-1 split in Broadcom Inc (AVGO) stock, the dynamic of shorting puts and calls has undergone a transformative shift, ushering in a new era of efficiency and accessibility. With the AVGO stock price now at one-tenth of its previous value, the landscape for executing out-of-the-money (OTM) options strategies has significantly evolved.

Facilitating Shorting Puts and Calls

Previously, executing these strategies required substantial cash outlays. For instance, shorting the July 19 expiration put option with a $1,670.00 strike price demanded $167,000 in cash. Today, amidst the revamped scenario, shorting the $167.00 strike price put option entails a significantly reduced cash requirement of just $16,700, offering a more accessible pathway for investors to generate income.

AVGO puts expiring July 19 – Barchart – As of July 15, 2024

A similar narrative unfolds in the realm of shorting covered calls. Previously a capital-intensive endeavor, the process now allows investors to engage in covered call trading after purchasing 100 shares for a fraction of the previous cost, signaling a more cost-effective approach post-split.

AVGO calls expiring July 19 – Barchart – As of July 19, 2024

Assessment of AVGO Stock

An evaluation of the broader market sentiment towards AVGO stock reveals a consensus on its undervaluation. Projections based on robust free cash flow (FCF) and corresponding margins forecast a potential upside, painting a bullish outlook for the stock post-split.

Moreover, analysts collectively echo optimism with the average price target projecting a notable increase from the current trading price, reaffirming the notion that AVGO stock remains an attractive investment opportunity.

Embracing a recalibrated approach post-split, potential investors can leverage these revised dynamics to navigate the options market with enhanced feasibility.

For more insights on stock market trends, visit Barchart’s Stock Market News.

See also  Peloton's Momentum: Examining the Golden Cross Phenomenon - A Deep DivePeloton's Momentum: Examining the Golden Cross Phenomenon - A Deep Dive