Semiconductor Stock for Options Bulls to Snag

TSM boasts attractively priced premiums at the moment

Mar 28, 2023 at 11:45 AM
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Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is breaking out of a falling wedge pattern on the charts. The shares also overcame resistance at the $90 level, which has provided pressure since mid-February, and recently found support at their 80-day moving average.
Furthermore, TSM has held above its most recent post-earnings bull gap, and broke above its +20% year-to-date breakeven level, which had been keeping a cap on gains recently.
There is plenty of potential for last year’s downgrades to be reversed as tech recovers and the dollar falls, with three of the 12 analysts in coverage carrying a “hold.”
Now looks like a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per TSM's Schaeffer's Volatility Index (SVI) of 37%, which sits in the 22nd percentile of its annual range. Plus, the security's Schaeffer's Volatility Scorecard (SVS) of 96 out of 100 means the stock has exceeded option traders' volatility expectations during the past year.

Our recommended call has a leverage ratio of 6.8, and will double in value on a 15.4% pop in the underlying shares.
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