TSMC Attracts $112 Million Bullish Option Block Trade: Options Chatter

The Taiwanese contractor that supplies almost all of the world’s advanced chips said on its website that it has started mass production of its 2-nanometer chips, which would be “the most advanced technology in the semiconductor industry in terms of both density and energy efficiency.”

An active buyer purchased call options that give their holder the right to buy 3.3 million TSMC American depositary receipts at $290 each in the next 49 days. That call option’s breakeven is $324.025, signaling the buyer’s optimism that the stock price could climb above that level, from its current price of $318.63  before the contract expires on Feb. 20.  

Orders from Chinese tech companies have already reached more than 2 million H200 chips, far exceeding the 700,000 chips Nvidia now has in stock, according to the report, citing sources it didn't name.

At current prices, those $290 calls have a 42% profit probability for the buyer. Still, the buyer isn’t the only one optimistic that the stock could keep climbing. Analysts’ average price target on the stock is $355.71.

That multi-leg transaction was posted at 12:03:54 p.m. Friday, the same time when an active seller collected a $135 million premium for unloading the same number of call options that give their holder the right to buy TSMC ADRs at $250 each.  

That leg of the trade has better odds for the seller, with a profit probability of almost 53% and a breakeven point of $320.30.

“We believe the semiconductor industry will witness a supercycle over the next decade as content growth per device across a host of markets accelerates, due to the emergence of greater AI capabilities,” CFRA analyst Angelo Zino, who has a buy rating on TSMC, wrote in a note earlier this week.  

Zino’s 12-month price target on TSMC is $360. He said his buy rating “reflects sustained technology leadership, accelerating AI demand and resilient margins despite overseas fab dilution.”