AVGO, CRWD, and PANW Report Tomorrow — What the Options Market Is Pricing

Earnings Echo | Wednesday 3 June 2026 | Published 22:00 London / 17:00 New York / 07:00 Tokyo

Before going through each company, it is worth explaining what options pricing tells you about earnings expectations — and why today’s Option Watch brief makes this session particularly interesting.

When a company is about to report earnings, implied volatility (IV) in its options rises sharply. This happens because nobody knows which way the stock will move, and option buyers are paying a premium for the right to be on the correct side. The level of IV at the time of earnings reflects the market’s collective estimate of how large the post-earnings move will be. A higher IV means a larger expected move. A lower IV means the market is not expecting a dramatic reaction.

To extract the expected move from options pricing, you look at the at-the-money straddle (the cost of buying both a call and a put at the current stock price) and express it as a percentage of the current stock price. This gives you the market’s consensus estimate for how far the stock will move after earnings, in either direction. This is not a target price — it is a range. The stock is likely to stay within this range post-earnings, but it can break out if the result is dramatically better or worse than expected.

The $22M AVGO strangle purchase flagged in today’s Institutional brief is a whale-sized bet on a large post-earnings move. A strangle profits when the stock moves significantly in either direction — the buyer does not need to know whether the result will be a beat or a miss. They just need the move to be larger than what the IV is implying. When a $22M strangle appears the day before earnings, the options market is telling you that someone with a very large cheque believes the expected move is underpriced.

AVGO is the most important of the three earnings Thursday. Broadcom’s business spans custom AI chips (XPUs for hyperscaler clients), networking infrastructure, and enterprise software. Its AI-related revenue has been one of the fastest-growing segments in the semiconductor industry. The question for Thursday is whether hyperscaler AI spending is holding up in a higher-for-longer rate environment, or whether the ISM miss and growth concerns are starting to slow capex commitments.

The $22M strangle from today’s Institutional brief suggests the options market is pricing a larger-than-usual move. A strangle of this size requires the stock to move roughly 7-10% post-earnings to be profitable (depending on the IV level at purchase). That is a wide range. It tells you the whale buyer believes the move will be significant, but is genuinely uncertain of direction.

What would constitute a beat: AI XPU revenue guidance raising, data centre networking growth above 30% year-on-year, and management commentary confirming that hyperscaler capex commitments are intact. This scenario would push AVGO 8-12% higher and drag QQQ meaningfully up. What would constitute a miss: any language suggesting AI capex slowing, custom chip order delays, or software segment weakness. This scenario would push AVGO 6-10% lower and test the QQQ $760 call position from today’s Options brief — which would be deeply out-of-the-money on an AVGO miss.

CrowdStrike has been on a recovery narrative since the July 2024 outage event. The company has retained a remarkable proportion of its customer base despite that incident, and annual recurring revenue growth has resumed strongly. Thursday’s report will test whether the recovery is complete or whether there are still cracks — elevated customer churn, elongated sales cycles, or any sign that the outage still casts a shadow on enterprise purchase decisions.

The cybersecurity sector broadly is benefiting from ongoing enterprise spending on threat detection and response — a trend that does not slow significantly in a mild economic downturn because the cost of a cyberattack is far higher than the cost of prevention. This provides CRWD with a degree of resilience against the broader ISM miss narrative. Enterprise security budgets are typically among the last things cut.

From today’s Sector Scorecard, tech saw +0.92 inflow on the session — much of that is likely pre-earnings positioning in CRWD and AVGO. If CRWD beats on annual recurring revenue growth (above 22% year-on-year) and shows improving net revenue retention, the cybersecurity thesis gets a positive data point. A miss on any of those metrics brings the recovery narrative back into question and the stock has limited patience for that.

Palo Alto Networks is executing a platformisation strategy — convincing enterprise clients to consolidate their cybersecurity tools onto a single PANW platform rather than using multiple point solutions. The strategy is strategically sound but operationally demanding: it requires enterprise clients to make large upfront consolidation decisions, and in a macro environment where CIOs are cautious about spending, that decision cycle elongates.

The risk for Thursday is that platformisation deals are taking longer to close than guidance assumed, and that deferred revenue recognition (the accounting treatment for large platform contracts) creates a misleading near-term revenue picture. PANW’s valuation is pricing in successful execution of the platformisation strategy at scale. Any signal that the strategy is hitting friction gets repriced harshly.

What to watch: next-generation security annual recurring revenue (NGSARR) growth, remaining performance obligations (RPO), and management’s commentary on deal velocity. If NGSARR is above $4.5B and management describes accelerating deal close rates, the platformisation thesis is intact. If NGSARR underwhelms and management introduces cautious language about macro headwinds to large deals, the stock will retreat from its current valuation level.

Hewlett Packard Enterprise (HPE) also reports Thursday and is worth monitoring as a secondary read on the enterprise technology spending picture. HPE sells servers and networking hardware — the physical infrastructure that AI systems run on. If HPE’s AI server revenue (particularly its GreenLake AI cloud segment) impresses, it corroborates the AVGO AI infrastructure thesis. If HPE disappoints on server demand, it raises questions about whether the AI capex story is as strong as AVGO’s XPU business implies.

HPE is less impactful on QQQ than AVGO, CRWD, or PANW, but it is a useful cross-reference. Strong HPE + strong AVGO = the AI infrastructure cycle is real and accelerating. Weak HPE + strong AVGO = the AI spending is concentrating in custom silicon, not commodity servers. Either way the data point is worth noting Thursday evening.

• Options Watch (Post 08): GEX at $760, 0DTE put-dominated, QQQ $760C block — the options landscape that Thursday’s earnings will either validate or destroy
• Sector Scorecard (Post 09): Tech +0.92 inflow, classified as pre-earnings parking — the earnings outcome determines whether this was smart money or caught in a trap
• Institutional Flow (Post 07): $22M AVGO strangle, QQQ $760C block — the institutional positioning ahead of Thursday prints

Domain risk: Around 65% (highest single-day risk of the week — triple-earnings event)

• All-miss scenario: QQQ -2% Friday pre-NFP. Combined with a weak NFP, this is the maximum downside event. Position sizing and the SPY put spread from Tactics are your insurance against this
• IV crush on a beat: Even if AVGO beats strongly, options holders who bought calls at elevated IV may see their options drop in value if the stock move is smaller than the IV implied. Directional options buyers need the stock to move further than the IV expected
• Gap risk on open Friday: Earnings prints after-close means all the price adjustment happens in after-hours trading, and Friday opens with a gap. Stops placed at Wednesday’s levels may not be filled at those prices