To The Moon

The major move we saw in the chip sector on July 9, 2026, has completely shifted the near-term momentum. The broader $Philadelphia Semiconductor Index(SOX)$ Philadelphia Semiconductor Index bounced back over 3%, largely recovering from a "sell-the-news" dip earlier in the week following Samsung's earnings.

Here is how the $30 billion Apple-Broadcom deal influences the landscape, what to expect from other semi giants, and how to approach our Bull Put options strategy.

The $30B Deal & AI Order Acceleration

While $Broadcom(AVGO)$ Broadcom’s massive $30B+ multi-year deal with Apple is primarily focused on U.S.-manufactured radio frequency (RF) and wireless connectivity components (like FBAR filters) via Apple's American Manufacturing Program, it has a massive hidden tailwind for AI.

• Securing Cash Flow for R&D: This contract locks in predictable, high-margin revenue through 2031 from Broadcom's largest customer. This fundamentally de-risks their balance sheet, freeing up immense capital to aggressively fund their custom ASIC (Application-Specific Integrated Circuit) AI chip division.

• The Custom AI Infrastructure Shift: Broadcom is simultaneously co-developing custom AI hardware with hyperscalers like Google and Meta, and reports show they are even working on technology to support Apple's upcoming dedicated AI servers.

We are absolutely seeing an acceleration in AI commitments. Hyperscale capital expenditure (CapEx) trends into late 2026 prove that mega-cap tech isn't slowing down—they are simply pivoting toward custom chips to lower their dependency on standard off-the-shelf hardware.

Will the Semi Trend Continue (ARM, AMD, and SK Hynix)?

The spectacular jumps from $ARM Holdings(ARM)$ Arm (+9.2%) and $Advanced Micro Devices(AMD)$ AMD (+5.67%) on July 9 were driven by a structural return of risk appetite and some company-specific catalysts:

• AMD: Bounced back sharply after a Morgan Stanley report highlighted surging, long-term demand for its next-generation MI400 AI accelerators and Venice server processors stretching all the way into 2027.

• ARM: Continues to benefit heavily as the premier architecture for power-efficient AI chips, catching a massive bid whenever custom silicon (like Apple's or Broadcom's) dominates the headlines.

• The SK Hynix Catalyst: SK Hynix starting to trade on Friday, July 10, serves as a crucial sentiment anchor. As a dominant provider of High Bandwidth Memory (HBM) essential for both Nvidia and AMD AI clusters, their trading performance acts as a direct thermometer for global hardware demand. If SK Hynix shows strong local demand, it will provide the institutional confidence needed to sustain the US semiconductor momentum into next week.

Position Strategy: Using Bull Put Spreads Long-Term

If you are fundamentally bullish on AVGO, ARM, and AMD for the long term, executing Bull Put Spreads (credit spreads) remains an excellent income-generation and entry strategy—if executed with strict risk management.

Because implied volatility (IV) usually spikes right before major earnings or macroeconomic data, selling premium allows you to capitalize on time decay () and volatility crush.

Recommended Setup Rules:

• Delta Targeting: Sell the Short Put at a 0.15 to 0.20 Delta (out-of-the-money) to provide a healthy cushion against the volatile swings typical of these high-beta semi stocks. Buy the Long Put $5 to $10 below that to define your maximum risk.

• Duration: Look out 30 to 45 days to expiration (DTE). This captures the fastest acceleration of time decay while giving the underlying stock room to breathe if there's a minor macro pullback.

• Earnings Watch: With Q2 earnings season kicking into gear, make sure you know the exact earnings dates for AVGO, ARM, and AMD. If you prefer to avoid binary events, write your spreads to expire before their respective earnings announcements, or widen the spread width to account for wider expected moves.

Given the solid institutional backlog for AI infrastructure, using these structural support levels to sell out-of-the-money puts lets you get paid while waiting for the tech bull market to advance.

Broadcom (AVGO) is scheduled to release its Q3 2026 earnings on Thursday, September 4, 2026 (with some calendars tracking September 3).

To capture premium, maximize time decay (), and entirely bypass the binary overnight volatility risk of the earnings announcement, the ideal option chain to target is the Friday, August 28, 2026 standard weekly expiration.

With AVGO currently trading at $401.11 (as of the July 9 closing), the stock has established a powerful macro support zone between $370 and $390 over the last few months. Here is a conservative, highly high-probability Bull Put Spread setup designed to expire safely before the printing of those Q3 numbers.

The Proposed Setup (Expiration: August 28, 2026)

• Current Stock Price: $401.11

• Days to Expiration (DTE): ~49 Days

• Sell to Open (Short Put): $360 Put (Targeting roughly a 0.15 Delta)

• Buy to Open (Long Put): $350 Put

Trade Dynamics & Risk Profile

• Spread Width: $10.00

• Estimated Net Credit: ~$1.10 to $1.35 per spread (dependent on minor intraday fluctuations).

• Maximum Profit: The net credit collected ($110 - $135 per contract).

• Maximum Risk: Spread Width minus Credit Collected = ~$8.65 to $8.90 ($865 - $890 per contract).

• Breakeven Price: Short Strike minus Credit = ~$358.75

Why This Specific Structure Works

1. Massive Technical Buffer

By writing the $360 short strike, you are positioning your risk significantly below the stock's massive structural floor. Broadcom has aggressively defended the $370–$388 block multiple times over the past year. For this trade to lose at expiration, AVGO would need to drop more than 10% from its current price—all during a period with zero negative company-specific catalysts on deck.

2. The Golden Window for Time Decay

Entering a credit spread at roughly 45 to 50 days out places you right at the crest of the accelerating  decay curve. Since you are closing or letting this expire a full week before earnings, you avoid the sudden Implied Volatility (IV) pump that happens in the final 72 hours before a major report, allowing the premium to melt away cleanly if the stock moves sideways or higher.

3. Clear Management Rules

• Profit Target: Plan to buy back and close the spread early if you can capture 50% to 60% of the maximum credit. Given that you have 49 days of runway, if AVGO rallies back toward $420 in July on general semi sector momentum, you may be able to exit this trade weeks ahead of schedule.

• Stop Loss: If macro weakness drags AVGO down and breaches the $375 psychological support level, consider buying back the spread to preserve capital rather than risking a full max loss on a complete breakdown past $360.

Summary

This conservative option strategy positions a Bull Put Spread on Broadcom (AVGO) to capture optimal time decay while entirely avoiding overnight earnings volatility.

Strategy Summary

Broadcom (AVGO) is expected to report Q3 2026 earnings on September 3–4, 2026. To capture high-probability premium without exposing capital to the unpredictable, binary gap risk of an earnings release, investors can target the August 28, 2026 weekly expiration cycle. With the stock closing at $401.11 on July 9, the proposed setup provides a substantial buffer below major structural support.

The trade involves selling the $360 short put (targeting a conservative ~0.15 Delta) and simultaneously buying the $350 long put to define risk, creating a $10-wide credit spread. This setup yields an estimated net credit of $1.10 to $1.35 per contract, which represents the maximum potential profit. The maximum risk is capped at $8.65 to $8.90 per contract (spread width minus credit collected), with a breakeven price hovering around $358.75.

This specific structure excels due to three structural factors:

• Technical Margin of Safety: The $360 short strike sits more than 10% below the current market price, deep below the heavily defended $370–$388 institutional support zone.

• Optimal Theta Decay: Initiating the trade roughly 49 days before expiration captures the steepest phase of the time decay curve. Because the position expires a full week before earnings, the trade avoids the late-stage Implied Volatility (IV) spike that typically inflates premium right before an announcement.

• Defined Execution Rules: To maximize capital efficiency, investors should look to buy back and close the spread early once 50% to 60% of the maximum profit is realized. Conversely, a strict risk-mitigation rule should be applied if AVGO breaks below its $375 psychological floor, allowing traders to exit early and preserve capital rather than enduring a maximum loss.

Appreciate if you could share your thoughts in the comment section whether you think continue to play bull put spread on AVGO and some of the quality semis would pay off in the long run?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.