Waste Management Options (WM): Unusual Trading Activity

| June 7, 2012 | 0 Comments

WM OptionsOptions in mega garbage disposal company Waste Management (WM) are experiencing a large amount of trading activity today.

Waste Management is an interesting company right now… 

They just reported first-quarter earnings that were largely in line with expectations.  However, revenue grew by a solid 6.2% to $3.3 billion.  Not too shabby.

And as you know, garbage needs to be disposed of whether the economy is growing or contracting.  In other words, the waste disposal business performs well in both good times and bad.

Despite these two positives, WM continues to trade in a tight range between $31 to $35 a share.

However, one option trader is positioning for a massive move to the upside.

It seems he’s thinking as the economy grows, the need for trash removal will increase dramatically.

How do I know this?

Simple… Yesterday a single trader came in and purchased 21,000 WM Oct $34 call options for an average price of $0.80 each.

This was obviously no small trade at $1,680,000.

And as a straight call option play, this option trader can see unlimited upside profits if his thesis is correct and WM skyrockets.

However, that’s a pretty large guess, so what’s behind his thinking?

As many of you know, Waste Managementis the largest integrated waste services provider in the US.  They currently operate 271 active landfills and 294 transfer stations.

In addition to their core collections and disposal business, the company’s Wheelabrator segment operates 22 waste-to-energy plants.  These plants convert recyclable trash and produce renewable energy.

But wait, there’s more…

Waste Management’s recent acquisition of Oakleaf may provide an interesting opportunity for meaningful short-term profitability.  Securing Oakleaf’s national accounts should prove to be a vital strategy for driving more dollars toward Waste Management’s own landfill assets.

In addition, WM’s ability to generate cash has given them ample opportunity to invest in technology.  Believe it or not, technology is an important driver that will help WM keep up with the ever increasing amount of trash our society produces.

No question about it, Waste Management offers customers a portfolio of solutions that can address the entire waste stream for a long time into the future.

Call me crazy, but I think this option trader is onto something.  Do you?

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

Safe Trading,

Marcus Haber

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.