Buy Call TSM

July 18, 2024
Sell Existing Position: Sell your TSM September 130/190 Bull Call Spread for $32 or more

The semiconductor stocks got slammed on Wednesday as the intense market rotation focused on selling the hottest of Nasdaq stocks. This was a negative for TSM. And despite opening higher this morning following reporting earnings, TSM is once again lower on the day, and has fallen through our mental stop.

And while I think TSM could bounce back if semiconductor/AI stocks get back in gear, there is also a chance that this group had overheated, and could fall further. For that reason, and to honor our stop, I am going to sell my position today for a monster profit.

To execute this trade you need to:

Sell to Close your TSM September 130 Calls

Buy to Close your TSM September 190 Calls

Please note, one of the potential reasons TSM is trading lower today is a report that China could invade Taiwan in the coming weeks. Who knows if this is true …

Regardless for the reason of the selling pressure, I’m going to stick to my stop and sell my position today for a big profit.

May 10, 2024
Adjust Existing Position: Against TSM September 130 Calls, Sell the September 190 Calls for $2 or more.

TSM is trading higher by 5% today and is once again making a run at its highs. This is a great situation for our September 130 calls. Let’s take advantage of this stock strength to sell an out-of-the-money call to lower our cost basis on our trade.

Of note, even though we are selling an out-of-the-money call, this position is without question bullish and we want TSM to trade higher in the months to come.

To execute this trade you need to:
Sell to Open the TSM September 190 Calls

After this adjustment is made our position will be:
Long TSM September 130 Call
Short TSM September 190 Call

As noted above, this position is without question still bullish. However …

Should TSM trade well above 190 by September expiration, I will have capped our profits … though that would be a fine situation as our bull call spread would close for a gain of approximately 450%.

March 6, 2024
Sell a Third of Existing Position: Sell a Third of your TSM September 130 Calls for $22 or more.

TSM is breaking out to a new high today and looks terrific. And while I think the stock goes higher if the market is firing on all cylinders, yesterday’s weakness is why we take partial profits along the way. Let’s stick to the system and lock in a gain of approximately 70% on the second third of our trade.

To execute this trade you need to:
Sell to Close a Third of your TSM September 130 Calls

March 1, 2024
Sell a Third of Existing Position: Sell a Third of your TSM September 130 Calls for $16 or more.

TSM is breaking out to a new high today as the semiconductor/AI story continues to bloom. And while I think TSM looks great, let’s stick to the system and lock in a gain of approximately 20%, and then go for greater gains in the days/weeks to come.

To execute this trade you need to:
Sell to Close a Third of your TSM September 130 Calls.

February 13, 2024
Buy the Taiwan Semiconductor (TSM) September 130 Calls (exp. 9/20) for $15 or less.

Taiwan Semiconductor (TSM) was one of the stock stars coming out of earnings season as the stock rallied from 101 to 113 on earnings, and continued its run to a high of 135 just last week.

Today, the stock is down marginally (trading at 129) as the Nasdaq is having its first bad day in quite some time. This stock strength on a day when TSM easily could have been down meaningfully is impressive.

Also, since earnings option activity in TSM has been wildly bullish, including these trades from last week:

2/8 – Buyer of 50,000 TSM May 120 Calls for $16.50 – Stock at 131 (rolled from May 100 calls)

2/7 – Buyer of 5,000 TSM April 135/150 Bull Call Spread for $2 – Stock at 123.5

The call buying above is impressive (especially the $82 million May buy), and is a super small sample of the bullish option activity in TSM, and I am going to get involved today via a September call buy.

To execute this trade you need to:
Buy to Open the TSM September 130 Call.

The most you can lose on this trade is the premium paid, or $1,500 per call purchased.

The risks I see in this trade are pretty straightforward:

The market has been on a very strong run, and could be due to cool off.

Similarly, the semiconductors on the back of the AI hype have been red hot, and could fall if that momentum cools off.

Finally, should China start agitating for a war with Taiwan, I would have to imagine TSM would come under heavy pressure.

And while there is risk in adding TSM today, especially with the Nasdaq having its first bad day in some time, I like the risk/reward in adding a September call that can withstand short-term choppiness in a leading semiconductor.