Waste Management, Inc. (WM) closed today’s session at $49.43 trading higher by only $0.10 on the day. The stock has been trading in a 52 week range of $43.24-$55.93 and has underperforming this year with shares falling buy over 3.7% year to date. The stock closed little changed today but there was a very interesting options trade that hit the tape early on in the session.
Early this morning, roughly 40 minutes after the open, a trader bought 4,217 WM May 50 calls for $0.20. By the end of the day over 15,000 contracts traded on this line driving options volume to 10 times the average daily volume in WM. As soon as these options hit the tape shares of WM began rallying trading as high as $49.90 on the day. These calls ripped higher with the stock doubling in value within minutes and trading as high as $0.45 on the session. A trader who bought these calls would have seen them double in value in about 2 minutes time. This is a great example of how unusual options activity in front month options can be traded for quick profits.
Trade: A trader bought 4,217 WM May 50 calls for $0.20
Risk: $20 per 1 lot
If a trader bought a 20 lot of these calls they would have profited $500 at the highs on only $400 in risk. An absolute blowout winner.