The S&P 500 index is up nearly 20% over the past nine weeks, a historic rally that will make even the most bullish investors blush. And while the company’s nine-day winning streak appears to be in jeopardy, two major tech companies that released earnings after the bell could decide their next moves. broadcoma major chip manufacturer that also acts as a software provider, and cloud strikea cybersecurity leader who is helping lift cloud stocks out of a bear market.
At more than $2 trillion, Broadcom is currently larger than two of the Magnificent Seven stocks, and with a year-to-date gain of just shy of 40%, it has far outpaced the other mega-cap stocks in the S&P 500’s top 10. This gives the company a one-year gain of 88%, compared to 29% for the S&P 500. Mag-7 ETF (MAGS).
Traders are bracing for an 8% swing in AVGO after earnings, based on options implied moves. Over the past two years, the median post-earnings price increase has been 9.9%, which is about normal for the stock, according to data from Cboe LiveVol.
Broadcom and CrowdStrike since the beginning of the year
Call volume on Wednesday outnumbered Broadcom’s puts by a nearly 2-to-1 ratio, with calls bought and sold at about the same level, and more than $400 million of the $520 million in total option premium was traded in calls, according to Spot Gamma. Of the top 20 deals, 18 expire on Friday. At the time of writing, the most popular call by volume and amount is the 500 strike call.
Crowdstrike has much lower option volumes and flows are not noticeably biased in either direction. Still, the cybersecurity stock, which has more than doubled in price since its March lows and now trades with a market capitalization of nearly $200 billion, is under pressure, falling behind Palo Alto Networks, which fell 6.5% today despite reporting earnings that beat most analysts’ expectations on Tuesday.
CrowdStrike traders are also bracing for an 8% swing, which is significantly higher than the median swing of 4.6% reported over the past two years. The stock’s actual earnings movement has been lower than its implied movement over the past seven quarters.
