Duan Yongping Eyes TSMC: A Masterclass in Selling Puts for Cash Flow

After pocketing substantial cash from selling puts on Tencent and Nvidia — which eventually expired worthless — legendary investor Duan Yongping is now turning his attention to TSMC ($TSM).

For those unfamiliar, Duan is one of China's most successful investors, often compared to Warren Buffett for his value-driven, long-term approach. He's known for early bets on companies like Pinduoduo and his role behind BBK Electronics, the parent of Oppo and Vivo.

His recent moves in the options market, particularly selling puts, are a masterclass in generating cash flow while positioning to buy high-quality companies at attractive prices.

From his latest social media comments, it looks like Duan is preparing to sell puts on TSMC — either to enter the stock at a discount or to collect hefty premiums. And honestly, his approach is something more investors should pay attention to, especially in today's overvalued U.S. stock market.

How Selling Puts Works (and How Duan Profits)

For those new to this strategy, selling a put option means agreeing to buy a stock at a set price (the strike price) if the buyer of the put decides to exercise it. In return, the seller (Duan, in this case) receives an upfront premium.

Here's why this works:

If the stock stays above the strike price, the put expires worthless — and the seller keeps the premium as pure profit.
If the stock falls below the strike price, the seller buys the stock at the agreed price — but still keeps the premium, effectively lowering their cost basis.

Duan has been using this strategy to generate steady cash flow while waiting to buy great companies at discounted prices. It's a win-win: either get paid to wait or buy a stock you already want — at a price you like.

Why TSMC?

Duan admitted he's admired TSMC for over 35 years but never took action — mainly because it's a "heavy asset" business. But now, with a pile of idle cash and TSMC offering surprisingly high option premiums, he's rethinking that stance.

A few takeaways from his comments:

TSMC's business model and corporate culture are key reasons he's attracted to the stock. He highlighted TSMC's focus on pure-play semiconductor manufacturing, which has allowed it to outpace competitors like UMC and Samsung.
He's not just doing this "for fun" — he sees real value in TSMC's long-term prospects.
He also acknowledged TSMC's culture of integrity, especially how it maintains strict loyalty to its clients, avoiding conflicts of interest that have plagued other players in the industry.
Importantly, Duan predicts that TSMC's attractive premiums might not last long — so he's acting now.

Why This Strategy Makes Sense Today

What stands out is Duan's disciplined use of cash-secured puts as a way to enter positions — a smart move in an overpriced market where you'd rather get paid to wait than chase stocks.

Selling puts on companies you actually want to own — at prices you'd love to buy them — is an underrated strategy among retail investors.

And he's focused on quality — not chasing speculative names. Duan even mentioned that while he'd love to sell puts on Kweichow Moutai, the premiums are too low to bother.

Of course, selling puts comes with risk (you must be ready to buy if the stock falls), but when applied to top-tier companies like TSMC, it's a balanced strategy that generates income and builds long-term positions.

Final Thoughts

I think Duan is absolutely right. TSMC may be a heavy asset company, but in a world driven by AI and semiconductors, owning the best foundry in the world is a strategic play — especially if you get paid to wait for the right price.

Personally, I see TSMC as a fantastic long-term holding, but like Duan, I'd prefer to enter at a better price. Maybe more of us should follow his lead: get paid for our patience. #tsmc