Bulls double money in $TSM

Option traders have been winning with upside positions in Taiwan Semiconductor Manufacturing (TSM) for weeks, and today is no exception.

On Sept. 30, Market Rebellion’s activity scanners identified the purchase of 3,110 November $47 calls for $1.55 to $1.57 as part of a bullish spread with shares at $46.40. This was clearly a new position, as open interest in the strike was a mere 95 contracts before that session began.

Those calls traded for as much as $3.65 so far today, more than twice their purchase prices. The stock rose 7.8% in the same time period, showing how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

It is the third winning trade in the name posted on Market Rebellion since Oct. 9.

TSM is up 1.27% to $50.05  this morning. Citi analyst Atif Malik said early this month that he expects positive quarterly results when the chip maker reports earnings before the market opens on Oct. 17.