Broadcom, SpaceX, and a War Premium: 3 LEAPS to Watch Now

Most traders look at mixed futures and see indecision. The smarter read: the market is pricing multiple competing narratives simultaneously, and that tension is exactly where mispriced options live. When Middle East diplomacy shifts overnight, Broadcom (AVGO) drops an earnings report that could reset AI infrastructure valuations, and SpaceX edges closer to a public debut that would instantly rank among the largest IPOs in U.S. history — you don't have a muddled tape. You have three distinct catalysts fighting for the same capital in the same 48-hour window. That kind of compression creates dislocations. And dislocations, in the options market, mean premium that hasn't fully caught up to what's coming. If you're trading LEAPS, this week deserves your full attention.

What's Actually Happening

Let's be precise about the mechanics at play. Middle East diplomatic developments have historically functioned as a binary switch for energy and defense sectors — a credible ceasefire signal hammers oil while compressing the geopolitical risk premium baked into broad market volatility. That's not speculation; it's the pattern from every major de-escalation event going back to 2019. Right now, that premium is still partially embedded in VIX-adjacent instruments, which means if diplomacy holds, you get a volatility crush that re-prices certain options dramatically.

Meanwhile, Broadcom (AVGO) is reporting into a market that has spent six months arguing about whether AI infrastructure spend is sustainable or a bubble. AVGO is uniquely positioned here — it's not just a chip story, it's a custom silicon story, with deep hyperscaler relationships at Google (GOOGL), Meta (META), and Apple (AAPL). A strong print with forward guidance that confirms continued data center buildout doesn't just move AVGO. It sends a signal across the entire semiconductor complex: AMD (AMD), Marvell (MRVL), and even NVIDIA (NVDA) reprice off that read-through.

The SpaceX IPO angle is separate but worth tracking for indirect plays. A public SpaceX creates a new benchmark for commercial space and defense tech valuations — and it forces institutional money to find proxies in the interim. That capital rotation has already been quietly showing up in names like L3Harris (LHX) and Rocket Lab (RKLB).

Why Options Traders Should Pay Attention

Here's what the options market is telling you right now: implied volatility on AVGO is elevated heading into earnings, which is standard. But the interesting setup isn't in the near-term weeklies where IV crush will punish buyers regardless of direction. The interesting setup is in what happens after the binary event resolves.

Post-earnings IV crush on LEAPS is significantly less severe than on short-dated options. A January 2027 LEAPS call on AVGO doesn't lose 40% of its value overnight because the company beat by three cents. The long duration absorbs the crush. What it does capture, cleanly, is the directional re-rating that follows a strong fundamental catalyst. If Broadcom confirms AI custom silicon demand is accelerating through 2026, the stock doesn't just pop 8% and forget it — it establishes a new fundamental floor that the market spends the next six to twelve months repricing upward.

The geopolitical angle creates a parallel dynamic in defense names. Middle East tension has kept names like RTX (RTX), Northrop Grumman (NOC), and Lockheed Martin (LMT) bid for months. A diplomatic resolution doesn't crater these stocks — defense budgets don't shrink on a ceasefire — but it temporarily suppresses sentiment. That creates a window where LEAPS on defense names get quietly cheaper while the underlying business trajectory remains intact. Falling IV plus a dip in the underlying equals better entry points on long-dated calls. That's not a complex thesis. It's basic options math working in your favor.

The SpaceX IPO, when it ultimately prices, will also likely reprice the entire commercial space and satellite communication sector. Viasat (VSAT) and ViaSat-adjacent plays, along with more liquid names like Boeing (BA) which has significant space division exposure, could see unusual options activity as institutions position ahead of that event.

The LEAPS Angle

The specific opportunity here sits in two buckets. First, the AVGO post-earnings continuation trade. If the print is strong and the stock gaps up, the instinct is to chase. Don't. Wait 48 hours. Let IV normalize. Then look at deep OTM January 2027 calls — strikes 20% to 30% out of the money. In a scenario where AVGO continues executing on AI custom silicon and the broader semiconductor cycle extends into 2026, those strikes are not fantasy. They're just early. A $0.05 to $0.08 LEAPS call on AVGO at a strike that looks aggressive today can move to $0.80 to $1.50 on a twelve-month re-rating. That's the asymmetry the setup is built around.

Second bucket: defense sector LEAPS on any diplomatic-driven softness. RTX (RTX) and LMT are the most liquid vehicles. If de-escalation headlines push these names down 3% to 5% over the next two weeks, that's your entry window on 2026 LEAPS calls. Defense revenue is contractual, multi-year, and entirely disconnected from whether one diplomatic meeting went well on a Thursday morning.

The challenge, of course, is finding these setups before the premium expands. Deep OTM LEAPS priced at $0.01 to $0.08 are genuinely difficult to surface manually — the options chain on a stock like AVGO or RTX has hundreds of strikes across dozens of expiration dates. This is exactly the use case that tools like the StrikeEdge scanner are built for — systematically scanning large-cap options chains to flag deep OTM LEAPS in that sub-$0.08 price range before a catalyst moves them. The edge isn't the idea. The edge is finding the right strike, the right expiration, and the right entry price before everyone else does.

Realistic scenario modeling matters here. These are not guaranteed outcomes. But in a scenario where AVGO trades up 25% over 18 months following confirmed AI capex continuation, a deep OTM LEAPS call purchased at $0.06 could reasonably reach $0.60 to $1.20. A 10x to 20x return on a defined, limited risk position. That's the math that makes LEAPS worth the analysis time.

Key Risks to Watch

The biggest risk to this framework is a simultaneous deterioration across all three narratives. A diplomatic collapse that spikes oil and crushes sentiment, an AVGO miss that reframes the AI buildout narrative as demand saturation, and SpaceX IPO delays that remove the catalyst from the satellite/defense complex — that combination would hit both buckets hard.

More specifically for LEAPS buyers: time decay is manageable on 18-to-24-month positions, but it's not zero. A thesis that doesn't begin playing out within 9 to 12 months starts becoming a theta problem even on long-dated paper. Deep OTM LEAPS also have zero intrinsic value by definition — the entire position can expire worthless. Size accordingly. These should be positions you can afford to lose completely, structured as a portfolio of several asymmetric bets rather than a concentrated single-name wager.

Watch earnings guidance language carefully on AVGO. A beat with cautious forward guidance is a trap for momentum buyers. Revenue beat plus raised guidance is the only combination that truly validates the LEAPS thesis here.

The convergence of Middle East diplomacy, the AVGO print, and the SpaceX IPO narrative isn't creating clarity — it's creating noise that masks real pricing inefficiencies. Your job as a LEAPS trader isn't to predict which narrative wins this week. It's to find the strikes and expirations where the market has under-priced the probability of a major move over the next 18 months, then let time and fundamentals do the work. That's the trade. Get specific, size responsibly, and let the setup breathe.