A Closer Look at Today's Options Activity for Broadcom (BRCM)

Posted on 02/14/2013 by Rich Singler

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NEW YORK (AVAFIN) -- Options traders were heavily trading call contracts during the last trading session establishing a new 3-month call volume record. A total of 5,941 put and 20,180 calls were traded where call contracts outnumbered puts 3.4:1, yielding a 0.29 ratio.

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Unusual volume provides reliable clues that the stock is expected to make a move. Investors can use the put/call ratio statistics to measure trader sentiment. A high put/call ratio suggests that the overall investment sentiment is bearish and that investors expect the underlying stock to decrease in value. Conversely, a low put/call ratio implies that investor sentiment is bullish based on the large amount of call options.

Both consumer demand and technological innovation are pushing converged devices, such as the Apple iPhone. Broadcom has demonstrated proficiency for integrating various functions onto a single chip, which ultimately enables the development of these devices. Additionaly, Broadcom has an extensive R&D staff, as the majority of its employees work in R&D. This impressive human capital should help the firm develop and integrate new technologies.

BRCM is trading above the 50 day moving average and higher than the 200 day moving average. Broadcom opened at $33.58 and the stock price rose $0.85 (+2.52%) to $34.57 during the market session. BRCM is trading between the range of $33.31 - $34.79. Within the last week, the shares have gained 4.30% of their value.

Broadcom designs and markets a wide portfolio of digital semiconductors. Incorporated in 1991, the company is primarily focused on three end markets: networking, broadband, and mobile devices, such as handsets and tablets. Broadcom is especially prominent in connectivity chips that integrate several communications standards, such as Bluetooth, GPS and Wi-Fi, into a single chip. As a "fabless" semiconductor company, Broadcom does not manufacture the chips it sells, but rather outsources production to third-party chip foundries.

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