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PostsAfter a full trading day following $Broadcom(AVGO.US)'s earnings report, we are now trying to analyze the current situation from options trading data.
After just one trading day post-earnings, the overall implied volatility has almost returned to its pre-earnings initial value.The top-left chart shows that the current implied volatility has fallen to the upper edge of the pre-earnings benchmark. Subsequent volatility will certainly experience fluctuations. The key point we need to observe is whether the lowest point of the benchmark shows signs of gradually rising higher. If so, that would be an early sign of the stock price preparing to reach new highs.The top-right chart shows the Put/Call volatility spread trend. I thought the "shock therapy" of a single-day drop of over 12% after earnings could push the volatility spread back above the zero line in one day, but it didn't. Instead, it remains significantly below the zero line.In plain terms: a single-day drop of 12.59% did not deliver a shock therapy to market participants. They are not scared yet!The bottom-right chart contains slightly more positive information. We see that the sharply falling stock price has already pushed the maximum pain point below some options. For the mid-June monthly options, it has now become possible for the maximum pain point to catch up with the stock price. The current maximum pain point for the 06/18 options is near $375. I believe this can be considered the first support level where the stock price might potentially stop falling in the near term.The bottom-left chart is also not very optimistic. Even after yesterday's significant drop, the correlation coefficient between stock price returns and volatility remains in a strongly positive value range. While not 100% reliable, this phenomenon usually appears around the stock price's peak.Conclusion: $Broadcom(AVGO.US) currently shows no signs of stopping its decline. It hasn't fallen enough yet!
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