TSMC Call Options Pop Hours Before Expiry as Revenue Jump Sent Shares Climbing
$Taiwan Semiconductor(TSM.US$ saw the volume on its $150 call options explode after the world's largest contract chipmaker reported an almost 60% jump in net revenue in April, fueling optimism over the prospects of the company and the rest of the industry.
The stock surged 5% to $149.865 at 12:02 p.m. in New York Friday. The rally ignited trading on call options that give the holder the right to buy shares at $150 each less than four hours before they expire this afternoon. That sent the volume for that call soaring to 22,670, almost seven times that of its open interest or its outstanding contracts.
The price of those $150 calls climbed as much as 23-fold to $1.15, before paring gains to 620% amid soaring demand. The increased trading likely includes holders who wrote some call options and are now buying them back to ensure their shares are not called away after the end of the trading day.
Earlier Friday, the Hsinchu-based company issued its monthly release showing revenue for April reached 236.02 billion New Taiwan dollars ($7.3 billion), up from NT$147.9 billion a year earlier. The surge took the total net revenue in the first four months of the year to NT$828.7 billion, up 26.2%, the company said.
The chipmaker also said its board approved a NT$4 per share dividend for the first quarter, payable to holders on Sept. 18.
The spike in TSMC's sales eased investor concerns that semiconductor makers' sales may not be growing fast enough to keep up with soaring share prices. TSMC, as the Taiwan chipmaker is known, has seen its share price rally 44% this year, outpacing the $S&P 500 Index(.SPX.US$'s 9.4% gain.
Total volume of all contracts tied to TSMC reached 241,640 at 12:15 p.m. in New York, landing stock in the ninth most-actively traded options, behind $Tesla(TSLA.US$ and $NVIDIA(NVDA.US$, which alternate in the top spot, and $Apple(AAPL.US$, $Advanced Micro Devices(AMD.US$, $Amazon(AMZN.US$ $Marathon Digital(MARA.US$, $Palantir(PLTR.US$ and $GameStop(GME.US$.
Still, 10 of the 15 technical indicators tracked by moomoo are signaling that the stock is now oversold and could be poised for a reversal. The remaining four indicators are neutral.
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Former editor at Bloomberg, then Lazard Asset Management. Posts aren’t investment advice. Views are just mine.
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