Buying TSM call contracts.

Taiwan Semiconductor (TSM) broke sharply higher last week after a strong earnings report.

Since that time, the stock pulled back as tech stocks declined. But the stock is still above it’s trading range from before the breakout and now looks to resume its bullish trend.

The company continues to grow profits and is trading at a very reasonable valuation compared to earnings. And the semiconductor area continues to be strong despite weakness in more speculative areas of the tech field.

Buying call contracts at this level gives us a chance to profit if TSM resumes its breakout momentum. And if our timing is off, our in-the-money call contracts should retain much of their value even if the stock slides a bit.