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March 12, 2013  Tue 4:45 AM CT

TSM: SEE CHART GET CHAIN FIND STRATEGIES
Traders are positioning for a possible drop in Taiwan Semiconductor as the chip maker hovers near its highest levels in more than 12 years.

More than 3,200 April 17.50 puts traded in a heavy buying pattern yesterday afternoon for $0.45 and $0.50, according to optionMONSTER's Depth Charge system. The volume was 8 times higher than the strike's open interest of 400 contracts before the session began, so these are clearly new positions.

The puts, which lock in the price where shares can be sold, weren't tied to any stock activity identified by our scanners yesterday but could have been bought to protect gains on a long position established earlier. If not, these contracts are making an outright bearish bet that TSM will fall more than 4 percent by expiration in mid-April. (See our Education section)

TSM was down 0.78 percent yesterday to $17.77, falling below its 50-day moving average. The stock has pulled back after spiking to $19.25 on Feb. 20, its highest price since August 2000. The semiconductor sector saw sharp gains in the beginning of the year but has slowed in recent weeks, according to our researchLAB analysis tool.

Overall puts in the name outpaced puts by more than 5 to 1 yesterday.
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