2 Chip Stocks Respond to Arm's Buzzy IPO, Nasdaq Debut

An unwinding of pessimism could further boost TSM

Digital Content Manager
Sep 14, 2023 at 2:25 PM
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The semiconductor sector is getting more attention than usual today, following the Nasdaq debut of Arm Holdings (NASDAQ:ARM). The company was valued at $54.5 billion in the biggest initial public offering (IPO) so far this year, with the 95.5 million shares sold at $51 each. At last check, ARM is up 18% at $60.17.

The event is boosting Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) as well, which was last seen up 1% at $91.63. However, Nvidia Corp (NASDAQ:NVDA) erased earlier gains, down 0.2% at $453.97 at last glance. TSM and NVDA sport healthy leads for the year, up 23% and 210.4%, respectively.

Options traders lean bullish toward NVDA. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 50-day call/put volume ratio of 1.26, which sits higher than 85% of readings from the past year.

The same cannot be said for TSM, which carries a Schaeffer's put/call open interest ratio (SOIR) of 1.46 that sits in the 97th percentile of annual readings. This indicates short-term options traders have been more bearish than usual.

Now looks like an ideal time to bet on either stock with options. The Schaeffer's Volatility Index (SVI) for both TSM and NVDA sits higher than only 13% of readings from the past year. In other words, traders are currently pricing low volatility expectations for the two equities.


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