As with Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing (TSM) is another failed recovery position in which we are deep underwater.
Although I remain bullish on the chip sector, in general, and TSM, in particular, near-term economic uncertainty and bearish sentiment are winning out and could continue to do so for the foreseeable future. Thus, I am recommending we book the loss now and move on from the position.
This one really hurts. In hindsight, a 2024 LEAP would have been a better approach. For anyone who decides to continue with the position and roll the underlying LEAP, please contact me via email with questions.
I know from more than a dozen emails this morning that some of you have been assigned. If this has happened to you, you must provide shares at the strike price of the call you sold. To obtain those shares, you can buy them at the strike price of the call you own.
If you have not been assigned, I am recommending we close the position now by buying back the short calls and selling the LEAPs. Note that the pricing on the short calls is a bit wonky, so work your limit orders if needed to exit the position.
Current Stock Price: $76.55
Cost Basis: $98.03
Action:
- Buy to close 4 TSM Dec Monthly (12/16) 72 Calls for around $4.60 each ($18.40 total)
- Sell to close 4 TSM Jan 2023 (1/20/23) 70 Calls for around $8.10 each ($32.40 total)
Loss: $84.03, or $8,403