Broadcom and CrowdStrike Earnings Set to Test a Historic Nine-Week Rally

CNBC reported Wednesday that a pair of high-stakes tech earnings releases could determine whether the S&P 500’s extraordinary recent run continues or stalls. Broadcom and CrowdStrike both reported results after the closing bell, with investors watching closely for any signal about the market’s next direction.

A Rally That Has Already Turned Heads

The S&P 500 climbed nearly 20% over the nine weeks leading into Wednesday’s session. That pace of gains has surprised even the most optimistic market participants. The winning streak appeared at risk heading into the close, adding urgency to the two earnings reports.

Broadcom has been the standout performer among the market’s largest stocks. The chipmaking and software hybrid now carries a valuation exceeding $2 trillion. That puts it ahead of at least two members of the so-called Magnificent Seven group of mega-cap tech names. Broadcom shares have gained nearly 40% year-to-date, well ahead of any comparable large-cap peer, and have roughly doubled over the past year.

Also Read: What the Magnificent Seven’s Diverging Fortunes Mean for Index Investors

Options Markets Signal an Eventful Night

Traders in the derivatives market were bracing for significant moves in both names. Options pricing implied roughly an 8% swing in Broadcom shares following the report. That aligns with the stock’s historical behavior, which has seen a median post-earnings move of nearly 10% over the past two years, according to Cboe LiveVol data.

Bullish positioning was notable. Call volume in Broadcom ran at nearly twice the level of put activity on Wednesday. More than $400 million of a total $520 million in options premium traded in calls, per data from SpotGamma. The most actively traded contract was the 500-strike call, with most top-volume contracts set to expire Friday.

Also Read: How Options Markets Are Pricing Big Tech Volatility This Earnings Season

CrowdStrike Carries Its Own Pressure

CrowdStrike entered its report under different circumstances. The cybersecurity company has more than doubled off its March lows, pushing its market capitalization close to $200 billion. That puts it just below rival Palo Alto Networks, which dropped 6.5% Wednesday despite posting results that beat most analyst estimates the prior evening.

Options traders priced in an 8% swing for CrowdStrike too, notably above the stock’s two-year median move of roughly 4.6% on earnings days. The stock has consistently moved less than options markets anticipated over the past seven consecutive reporting periods.

Both reports arrive at a moment when sentiment is stretched and the margin for disappointment is thin.

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