Taiwan Semiconductor's profits have steadily grown for two years
Shares of Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) are surging to record highs, leading the rest of the chip sector higher after a blockbuster earnings report. Amid strong demand for AI chips, the company posted record profit in its eighth consecutive quarter of year-over-year growth. The chip giant announced much better-than-expected fourth-quarter revenue and net income, lifted its full-year forecast, and also posted a significant increase in capital expenditure plans.
At last glance, TSM was up 6.6% to trade at $348.64. The stock started 2026 by breaking above pressure at the $310 level, and is now up 14.3% year to date and 68% year over year. Longer term, support at the 100-day moving average kept pullbacks in check in November and December, and now resides at $287.
Unsurprisingly, TSM is a favorite in the options pits today. So far, the AI behemoth has seen 184,000 calls and 102,000 puts exchanged, which is five times the options volume typically seen at this point. The January 15, 2026 350-strike call is the most popular contract, with new positions opening there.
These options are reasonably priced at the moment, per the security's Schaeffer's Volatility Index (SVI) of 37%, which ranks in the low 11th percentile of its annual range. This means options traders are pricing in low volatility expectations at the moment.