Head-scratcher: Why So Many Traders "Put" TSMC? and How to Deploy Options Before the Print?

ImSteven wrote a column · Jan 13 03:29

Key Points

TSMC will report 2025 Q4 earnings on Jan 15, pre-market in the U.S. (after the close in Taiwan), regarded as a kicking-off for U.S. earnings season. And since TSMC releases monthly semiconductor sales data, its quarterly results are relatively transparent.

Street consensus currently expects Q4 revenue of US$32.38B (about NT$1,046B), up ~20% YoY. TSMC’s own Q4 guidance range was US$32.2B–US$33.4B.

One nuance worth highlighting: the Taiwan dollar has appreciated. If we use USD/NTD = 30.6, then on a Taiwan-dollar basis, Q4 revenue translated back into USD would already exceed US$34.1B. That FX translation effect could be a tailwind for TSM (which is priced in USD).

What Matters Most This Quarter

The key swing factors for this print are: (1) full-year 2026 guidance, (2) CoWoS capacity expansion progress, and (3) whether management signals higher 2026 capex

For 2026, consensus is effectively pricing in ~25% growth vs. 2025. If management indicates growth expectations above that level, it could serve as a major upside catalyst for the stock.

With memory pricing improving and “chip shortage” narratives resurfacing across multiple segments, semiconductor equipment names have surged in the first few trading days of 2026: Lithography leader ASML (ASML), process control / metrology leader KLA (KLAC), and its Japanese peer Advantest (6857 JP), materials leader Applied Materials (AMAT), and Japanese peer Tokyo Electron (8035 JP).

As the global bellwether for advanced logic manufacturing, TSMC is also up 8.8% YTD. Memory names have been even more explosive, with MU and SNDK rallying sharply.

TSMC has historically been disciplined on capex. If management uses this earnings call to signal capex expansion, it would suggest the semiconductor upcycle is not only intact, but may even be entering a “refueling” phase, which might boom the chip sector and the broad market as well.

Fundamentals: A Simple Valuation Frame

Using consensus assumptions as a baseline, 2026 EPS for TSMC is roughly 12–13 USD. If we take 12.5 USD as a midpoint and apply a 30x P/E, that implies a fair value around $375—about 12.6% upside from the current price.

Street targets remain widely dispersed: high end ~$500, low end ~$210, with an average around ~$366—close to the ~$375 derived from this simple framework.

Head-scratcher: Why So Many Traders "Put" TSMC? and How to Deploy Options Before the Print?

Options Market Snapshot (Pre-Earnings)

(1) IV: Elevated, but Still Not “High”

Ahead of earnings, implied volatility has ticked up. IV Percentile is now 67%, while the absolute IV level remains relatively modest at ~43.33%.

(2) Strikes Distribution: Puts Dominate

Looking at positioning over the past two months, puts noticeably outweigh calls. On the call side, there’s a visible peak at the $290 strike. On the put side, $250–$300 shows “mini-peaks” at nearly every round-number strike.

(3) Put/Call Ratio: Rising to a 3-Year High

The put/call ratio has been trending higher for nearly a full year, with a particularly sharp rise since October. It now sits around 1.64, the highest level in about three years.

Frankly, it’s difficult to reconcile why so many investors are leaning into puts on TSMC at this stage.

(4) IV Crush: “Schrödinger’s Cat”

Historically, TSMC’s post-earnings IV crush has been highly inconsistent—almost “Schrödinger’s cat”-like. Sometimes IV collapses hard (as highlighted by the red boxes in the chart). Other times, the crush is minimal. There are also cases like 2025 Q1, where IV drifted lower from pre- to post-earnings without a clear break exactly on the earnings date.

(5) AM vs. EM: Selling Premium Has Historically Been Favored

From an Actual Move (AM) vs. Expected Move (EM) perspective, in the past 14 earnings events, TSMC only had 3 instances where the post-earnings realized move exceeded what the pre-earnings options market implied.

That skew suggests a clear historical edge: selling premium into earnings has, on average, been more favorable than buying premium.

Options Strategy Ideas

Given the modest pre-earnings IV lift, two seller-style approaches stand out: short put or short strangle.

(1) Short Put

A short put can be initiated into the event and potentially closed opportunistically after earnings, depending on price action and IV behavior.

(2) Short Strangle

For a short strangle, the key is discipline after the print: if IV drops post-earnings, it’s often prudent to close the call leg immediately (to avoid getting hurt by upside drift / post-event trend continuation). While the put leg can be held for more observation.