Taiwan Semiconductor may have seen terrific gains this past year, but some traders are betting that the stock's run is over.
The Apple supplier is up 10 percent so far in 2015. Yet on Thursday, traders placed bearish positions that would start to make money if those gains are nearly wiped out.
Thursday's put volume in the stock was twice its daily average. In particular, a lot of buying took place in the July-expiry 25 puts. Over 6,000 traded at an average price of $1.80 each. The total trade represents over a million dollar bet that the stock will give back all of this year's gains in the next three months.
"That essentially means that you are giving up all of this year's gains to hedge for 120 days," explained CNBC contributor Mike Khouw. "So if they are hedging anything, it isn't this year's gains that they are concerned about and they are looking for protection that kicks in almost immediately."