Chip Stock Surges to Record High on Upbeat Outlook

The equity is up more than 18% in the last 12 months

Assistant Editor
Jan 13, 2022 at 12:03 PM
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The shares of Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) are trading at all-time highs today, last seen up 6.4% at $140.74, after reporting record fourth-quarter profits. The Apple (AAPL) supplier's quarterly report also included an upbeat current-quarter outlook, as demand for semiconductors continues to surge. What's more, TSM said it plans on lifting capital spending to between $40 and $44 billion in 2022, and outlined a $100 billion expansion plan for the next few years. 

TSM's options pits are seeing a surge in activity in response to the news. In fact, at the halfway mark of today's trading, over 272,000 calls and 102,000 puts have crossed the tape -- nine times the volume typically seen at this point. Most popular by far is the weekly 1/14 145-strike call, where new positions are being opened.

A broader look shows the options pits have been unusually pessimistic toward Taiwan Semiconductor stock, and an unwinding of this pessimism could have bullish implications. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TSM sports a 10-day put/call volume ratio that stands higher than 72% of readings from the past year. In other words, long puts have been more popular of late.

On the charts, Taiwan Semiconductor stock earlier hit an all-time high of $145, and boasts an 18.7% year-over-year lead.  Support is prevalent from all noteworthy moving averages, as it looks to notch its fourth-consecutive daily win.

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