News broke yesterday that Taiwan Semiconductor ($TSM) had a slowdown in production due to a virus.
Analyzing Financial News – Quick Lesson
Bloomberg had a nice doom and gloom headlined article, entitled “Computer Virus Cripples iPhone Chipmaker TSMC Plants“.
However, if you read the article, the first subheader reads…
“Some factories back to normal, rest in another day, TSMC says.”
Those two statements sound pretty different. The next subheader says that $TSM says that the virus wasn’t caused by a hacker.
Neither statement might be true. But…
…most will read just the headline and freakout. It might/will likely cause $TSM and $AAPL stock to drop at open tomorrow.
Yet, for this thought experiment, let’s assume the sub-headers and the comments from TSMC are lies.
There are two main questions we need to ask ourselves about the backstory.
- How many of the necessary chips have been made?
- Based on the release dates of the phones/devices the Apple devices that are going to be made using those particular chips…..how is that going to impact production and release?
- [In this instance it chips for iPhones]
Until we get the answer to those questions…buy [buy/trade puts] on the rumor and sell [sell those puts] on the news.
Just a quick lesson for today after my trading brother sarge [@bronco4life on stocktwits] shared with me in the trading room.