Option Trade 
Broadcom Corporation (NASDAQ:BRCM) Calls 
Monday, October 26, 2015

**OPTION TRADE: Buy the BRCM Jan 2016 55.000 call (BRCM160115C00055000) at approximately $0.90. Place a pre-determined sell at $2.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.40.

by Ian Harvey

October 26, 2015

Broadcom Corporation (NASDAQ: BRCM), a global semiconductor solution for wired and wireless communications, is scheduled to report its third-quarter 2015 results after the market closes today, October 26th. Analysts are predicting that Broadcom Corporation will report $0.73 earnings per share.

Looking ahead to full year estimates, analysts have placed the consensus earnings per share estimate for the current year at $2.80. The most bullish analyst sees the company reporting earnings per share of $3.00 while the most bearish analyst is predicting a current year EPS number of $2.58.

Shares of Broadcom Corp. rose by 1.57% in the last five trading days and 0.86% for the last 4 weeks. Broadcom Corp. is up 2.24% in the last 3-month period. Year-to-Date the stock performance stands at 22.34%.

Broadcom continues to drive innovation and engineering excellence across a broad range of communication end markets to help its customers enhance device performance, cut down costs and improve the overall power efficiency. The company is well placed in the fast-growing wired and wireless communications markets, with cutting-edge solutions for a growing number of connected users who are demanding more content and bandwidth. Strong demand for smartphones and tablets are catalysts for the company's growth, and will likely boost the top line.

Broadcom stands to benefit from increased demand for its products as customers like Samsung, Cisco and Apple ramp up new products such as iPhone6 and the Galaxy series. It is also broadening the connectivity business beyond smartphones into adjacent markets and powering with both Denon and Harman Kardon's WiFi home audio systems.

The wearable market constitutes a fast growing segment of the larger Internet of Things (IoT) and is expected to be worth $80 billion by 2020. Broadcom's new platform addresses a key issue of battery drain in wearables, translating into huge prospects for the same. In addition, Broadcom is expecting significant customer interest in its 4x4 multiuser MIMO 5G WiFi chip targeted for its retail routers, broadband access gateways and set-top boxes. The wind-down of its cellular base-band business is further expected to reduce by about $700 million in R&D and selling, general and administrative expenses annually, thereby improving the bottom line.

The proposed acquisition of Broadcom by rival semiconductor manufacturer Avago Technologies Ltd (AVGO) is currently on track. The deal is arguably the largest of its kind in the semiconductor chip industry and would create a behemoth with one of the most diversified communications platforms in the semiconductor industry at combined annual revenues of approximately $15 billion. Although the transaction is expected to be completed by the end of first-quarter 2016, it is likely to have some effect on the impending quarterly results of Broadcom.

There are 18 sell-side research firms that have issued a stock rating on Broadcom Corporation within the past year. The consensus, or mean target price of the Wall Street analysts covering the firm is $57.39.

Harvey’s Options Volatility Indicator


Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the BRCM Jan 2016 55.000 call (BRCM160115C00055000) at approximately $0.90. Place a pre-determined sell at $2.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.40.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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