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.
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.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers