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Waste Management draws bullish bet

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A large trader is betting that Waste Management will rebound in the next month.

optionMONSTER's Heat Seeker systems shows that a trader sold 22,713 June 35 calls for $4.76 and bought the same number of July 38 calls for $2.01. Volume was below open interest in the June contracts but above it in the July calls, indicating that a long-call position is being rolled forward by a month.

The trader is moving the calls to a strike that is $3 higher, taking some money off the table but remaining positioned for further gains by expiration a month from today--about two weeks before the company's next earnings report. The July calls, which lock in the price where shares can be purchased, will track the stock price closely because they are in the money . (See our Education section)

WM is off fractionally at $39.52 today. The garbage-disposal company has pulled back after hitting a 52-week high of $43 on May 22 but is apparently trying to find support around the $40 level.

The company is scheduled to release second-quarter results on July 30. Although recent reports have often missed forecasts, many investors remain hopeful that Waste Management will become a tax-free real-estate investment trust.

Total option volume tops 50,000 contracts so far today, already more than 5 times its daily average for the last month. Only 222 puts have changed hands in the session.

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