Bulls score again in $TSM

Option traders have been racking up profits in Taiwan Semiconductor Manufacturing (TSM) for weeks, and they doubled their money on another upside position today.

On Sept. 5, Market Rebellion’s activity scanners identified the purchase of 10,000 January $45 calls for $2.30 to $2.45 with shares at $44.37. This was clearly fresh buying, as volume was well above the previous open interest of 7,472 contracts.

Those calls traded for as much as $6.40 today, more than 2.5 times their purchase prices. The stock rose 14.09% 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 fourth winning trade in the name posted on Market Rebellion since Oct. 9.

TSM notched a 52-week high after beating quarterly expectations this morning but has pulled back to $49.61, off 1.04% on the session. The chip maker reached $51.21 right after the opening bell.