I originally thought TSMC ($Taiwan Semiconductor(TSM.US)) could be as reassuring as in the past, so I haven't looked at TSMC for quite a while, even on the eve of the earnings report.........
But the chart below shows the volatility spread difference on the eve of the earnings report. I just praised TSMC last week for not showing signs of long-side overheating before the report.However, looking at the chart now, I suddenly realized that the long side has been frantically betting on call options in the last three trading days.In the past few times when TSMC showed this situation, it didn't necessarily point to a stock price decline. Even though, as a general rule, excessive long-side accumulation is almost a standard precursor to a 'sell the news' scenario after the report.When TSMC's volatility spread difference reached deep negative values in the past, it didn't point to a stock price decline.But this time seems different. Returning to the general trading rule, $Taiwan Semiconductor(TSM.US) is currently down 4.2% in pre-market trading.
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