TSM Credit Put Spread is Attractively Offered at $1.32; Theoretical Value $1.21

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This TSM Credit Put Spread Can Net 79% in 12 Days

Bullish play with a target stock price of $129 or above

Strategy has +79% upside potential and 9% overvalued

Buy126 Put
Sell129 Put

Taiwan Semiconductor Manufacturing Company Ltd. stock price has dropped -1.2% today to $128.88. Based on moving averages, TSM has been in a uptrend since January 16, so this spread would be a great way to leverage a bullish outlook. Based on historical stock price behavior, this spread for TSM has a theoretical 66% success rate.

Option Profit Calculator for TSM Put Spread at 01-Mar-24 Expiration

If TSM stock price at expiration is at or above $129.00, this spread has a 79% upside potential

The optimal stock price for this option strategy is to close at or above $129.00 on the expiration date, March 1, 2024. In that scenario, both puts would expire worthless, allowing you to keep the entire $1.32 you received when selling the spread. That corresponds to a potential +79% return on the amount at risk with 12 days left until expiration.

The maximum gain will be realized if the stock price is at or above 129.00. The maximum gain is $1.32

The breakeven point is at 127.68, which is 1.1% below the current spot price.

The maximum loss will occur when the stock price is at or below 126. The max loss is $1.68.

TSM Spread Current Market Price vs. Historical Average

TSM Put Spread is trading at a 9% premium to historical average.

Using historical data to measure how a similar spread in TSM was priced in the market, the 4-year average value was 1.21, with a high mark of 1.53 and a low of 0.97.

Currently, this vertical put spread is bid at 1.32 and offered at 1.48. The midpoint of the spread is 1.40.

If we use 1.21 as our historical fair value benchmark, the current market bid price is at a 9% premium, while the current market midpoint represents a 16% premium.

Current PriceHistorical Values of Similar Spreads
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.


The TSM put spread we've identified here can be a good way to play a bullish outlook because the option strategy has a +79% upside potential, is 9% overpriced relative to historical measures, and will benefit from a stock price at or above $129.

See how Market Chameleon can help you make smarter and more efficient trades!

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