Bulls double their money in $TSM

Option traders are bagging huge profits in Taiwan Semiconductor Manufacturing (TSM) today.

On Aug. 11, Market Rebellion’s Unusual Activity Scanners identified the purchase of 5,000 October $80 calls, expiring this Friday, as part of a bullish spread for $4.80 to $5.55 with shares at $78.64. This was clearly fresh buying, as volume was well above the previous open interest of 3,349 contracts.

Those calls have traded for as much as $11.22 so far today, more than double their purchase prices. The stock rose 15.92% 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.

TSM was last trading for $91.12, up 2.66% on the session and just shy of its new high of $91.20 made earlier in the session. The chip maker reported on Thursday that its September revenues had risen 24.9% year-on-year.