Taiwan Semiconductor (TSM) – TSM has been consolidating 2020 gains for much of the last 6 months of this year building a long base near the stocks year to date VPOC just under 120. The stock is a lower volatility Semi leader compared to its peers like AMD and NVDA but looks to have found a floor in this 115-120 zone after the recent pullback from its November highs near 127. After breaking that downtrend line it is now back testing that former breakout and likely to hold 120 as support going into January. RSI has reset back to 50 on the daily and the weekly RSI staying above 50 as well indicating the bull trend intact. TSM has a long weekly and daily squeeze forming on multiple timeframes which points to a large move coming soon. The stock has held its 200 day EMA as support below numerous times the last several months and that continues to point higher. An optimal spot to enter a bull put spread expecting the 120 level to hold into year end and January expiration. Seasonality does turn quite bullish for TSM in Jan-Feb with the stock being up 7 of the last 10 years in January for about an average gain of +3%. Options flows are mostly bullish in TSM and on 12/10 saw an opening put sale in September $110 puts sold at $8.45 for $1.1M. Also back on 11/19, a large buyer of March $100 deep ITM calls were bought at $25.35 for $6.7M in premium and are still in open interest.

Trade to consider: Sell TSM January 120/115 put spread for 2.25 credit or better