Waste Management has broken out to new highs, and the bulls are
betting that there's no going back for the garbage-disposal
optionMONSTER's Heat Seeker monitoring system detected the purchase
of some 7,800 October 42 calls, with premiums ratcheting up from
$1.10 to $1.30. Volume is 9 times greater than average at the
lock in the price where investors can buy shares in the trash
hauler. Given their cheap cost now, they can generate significant
leverage if the stock continues to climb. For instance, a gain of
just 10 percent over the next five months will more than double the
initial investment. Another benefit is that investors risk much
less capital than they would buying shares. (See our
WM is up 1.07 percent to $41.94 this afternoon and 24 percent so
far this year. While earnings have generally missed expectations,
investors have piled into the name on hopes that it will transform
itself into a tax-free real-estate investment trust.
In the last week, the stock has been finding support above the same
$41 level where it peaked in 2007. That could be leading some chart
watchers to believe that it will now continue to rally, perhaps
filling a bearish gap that occurred way back in July 1999. If
they're correct, it could translate into a move above $50.
Total option volume in the name is triple its daily average so far
in the session, according to the Heat Seeker. Calls outnumber puts
by 25 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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