Broadcom Corporation (BRCM) is a company providing semiconductors for wireless communications. The company’s stock is currently trading around $30.80 in a 52 week range of $23.25-$37.85. The stock has been performing relatively well this year with shares of BRCM rallying 3.85% year to date. The stock gapped lower this morning and options traders seem to think this move lower will continue through Early April. Earlier this morning a trader bought 5,000 BRCM Apr 4th weekly 31.5 puts for $0.83. This is a very bearish trade that exposes this trader to `$415,000 in risk over the next 8 days. Although the stock is trading above the Ichimoku Cloud we believe that this orderflow could be signaling a short term top in BRCM.
My trade: Buying the BRCM Apr 4th Weekly 31.5 puts for $0.90
Risk: $90 per 1 lot
Breakeven: $30.60