Are you still remembering the TSM 16 July 140 CALL? We bought it on February 22.
TSM was on the dive for a month after we bought it and then it rebounded for two weeks and then it sloped down again and has been stagnating since. This is the biggest Semiconductor Company in the World and has an excellent record and earnings beyond expectations. Well, new machinery for more chips requires big capital, which will be taken off the shareholders earnings. But it is a good investment nevertheless. TSM is solidly funded! This stock also tanks at great earnings! Great record though.
The stock lost 20% on value and our CALL position 94%.
The first image we took on FEB 22. The same three candles we see marked in the second image. The assumption that the stock will increase in value in the next two months turned out not to happen. Instead of going up by $30 from $131 we are down at $117! That is quite a difference.
We already discussed that the entry was wrong before. Now how can we fix a 94% loss on this position? I am not too concerned about the numbers anymore since the loss is already incorporated by 80%. The actual loss for booking is minimal.
But still, the question is interesting for future rescue operations. This is true for a good company only. GM was one and that stock came back and made us a profit even though we also did a wrong entry.
Shall we?
We dived for one month straight and recovered partially for 2 weeks and then TSM fell asleep.
The main question is, is this the end of TSM and its business? Will they simply go away? Can they keep their investor base happy? I think TSM is here to stay. It is one of the Blue chip companies of the chip making business. TSM provides all chips for Apple!
Our position still has 72 days to go and I will buy time. 72 days are 2 1/2 months. Could TSM climb $25 in 2 months? YES! Is it likely? Probably not for what I have seen in the past two months. What if we added another month to the expiration and tell the REFEREE just to let us play a little longer? How much that gonna cost us? Not that much. 5% of the original costs. If we wait with buying time and lets assume the stock is up but not as much as wished and then we decide to buy calls in an uptrend -- they will be much more expensive!
The 20 AUG 140 CALL would expire in 108 days!. Within 3.5 months I think TSM could actually do it. And this Call is super cheap!! Later we can ask for another extension.
This Call will be positive.
We could convert it into a calendar spread to lower the costs of the extension, getting premium paid but this would expose us to a collateral capital of almost the same amount as the original capital! So I prefer just an extension in the game for a small amount.
Excel Charts based on YAHOO data sets. Closing prices weekly! The Long Call blue line indicates the Strike Price for our call.
Projected growth per week if the stocks moves only upwards.
These numbers are weekly numbers. TSM will not hit 5th Deviation within one week. ZERO chance. But a 5$ climb within one week lies within the 1st Deviation and has a probability of 39%.
Statistics tell us a 40% uptrend and a 33% downtrend within 1st deviation limits. Since we have 15 weeks to go I expect 6.6 Weeks to be down and 8.2 weeks to be up. The Mean of 5 years of data suggests that TSM will be up by only 10$ after 14 weeks!! Much below our needs. So lets see if we do $125 or $145 in August.
We have 15 weeks to go!
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