Options Brief: Waste Management (WM)

WM – Waste Management, Inc. – Shares of the provider of integrated waste services in North America increased 0.15% to $31.42 just before 11:15 am (ET), but one bearish options strategist populating the October contract does not expect Waste Management’s shares to appreciate further in the next several months to expiration. It looks like the pessimistic player initiated a bearish credit call spread by selling roughly 2,200 calls at the October $32.5 strike for an average premium of $1.48 apiece, and by purchasing about the same number of calls at the higher October $35 strike for an average premium of $0.68 each. The investor pockets a net credit of $0.80 per contract, and keeps the full amount received as long as shares of the underlying stock trade below $32.50 through October expiration. The trader responsible for the transaction is exposed to maximum potential losses of $1.70 per contract should Waste Management’s share price surge 11.4% to rally through $35.00 by expiration day in October.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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