AVGO Stock – Broadcom Trading Journal with VantagePoint

AVGO Stock – Broadcom Trading Journal with VantagePoint

VantagePoint Trading Software is a forecasting tool that uses both end of day data and Artificial Intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The Artificial Intelligence software forecasts market movement for stocks, futures, Forex, ETFs and Cryptocurrencies. Broadcom, AVGO stock, is in focus today…

This journal entry looks at the recent market movements of Broadcom NASDAQ: AVGO

VantagePoint Trading Journal AVGO Stock

Per Bloomberg: President Donald Trump has decided to withdraw from the landmark Iran nuclear accord, according to a U.S. official, a move that would plunge the Mideast into a new era of uncertainty. The markets do not seem to care about the Iran news as the broad markets are mixed in mid-day trade.

Let’s look at Broadcom today (ticker:  AVGO):

The VantagePoint platform recently indicated a potential upside breakout in AVGO could be forming due to a bullish crossover between 5/4/18 and 5/7/18.

Using the predictive indicators embedded within the VantagePoint and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average between 5/4/18 and 5/7/18. We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN position that same day.  This indicator measures strength and weakness for a 48-hour period, in this case strength.  The move to the GREEN position further makes the case for a potential bullish scenario. Additionally, we see that the predicted high and low for today’s range is above the actual high and low from yesterday’s session.

Strategy Discussion

If one were a straight stock trader, simply buying AVGO in the $235.00 area could prove to be prudent. You are anticipating a move to the upside. It’s also a conservative way to enter AVGO without the limitation of time associated with other strategies. It would also be good practice to place a sell-stop order in the $228.00 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread is one way to approach this situation.  First order of business is to determine your target strike.  To do this you will need three pieces of information. The current price, option expiration date and at the money implied volatility for that expiration.  In this case, the calculation yields a target price of approximately $246.  One may consider the AVGO May 18th Regular Expiration 242.5/245 call spread, paying $0.65.  You max risk is the amount of premium you pay, the max reward is the width of the spread less any premium paid.  In this case max risk is $0.65, max reward is $2.50 – $0.65 = $1.85.  This gives us a reward to risk ratio of 2.85:1!

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

Use smart software to your advantage

VantagePoint Software uses the power of Artificial Intelligence, which traders use to predict market direction and strength 1-3 days in advance with up to 86% accuracy.  With deep learning using neural networks, VantagePoint can show you what the market is going to do instead of what it’s already done. Request a personalized demonstration of VantagePoint Software today. Learn why more than 25,000 traders trust the software, which helps them achieve trading success.

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By |2018-05-08T14:44:22+00:00May 8th, 2018|Trading Strategy|2 Comments

2 Comments

  1. Wasim May 10, 2018 at 1:33 am - Reply

    Broadcom’s side of the story has less near-term risk, but far bigger long-term implications for this M&A juggernaut.

    • Andrew Rowe May 11, 2018 at 2:05 pm - Reply

      Hi there. We’d love to discuss this recent forecast with you. Give us a call directly at 813-973-0496 to speak with a software specialist. Or you can email us your contact info at info@vantagepointsoftware.com

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