The Long-Term Outperformer Ripe for Bulls

It looks like the perfect time to pick up premium on WM

by Research Dept.

Published on Jan 14, 2020 at 12:15 PM
Updated on Jun 24, 2020 at 10:16 AM

Trash specialist Waste Management, Inc. (NYSE:WM) has been a long-term outperformer on the charts, easily surpassing the performance of the broader market in the past two years, and the shares are in the midst of another strong uptrend at the moment thanks to support from the 12-month moving average. As such, it looks like a prime time to get behind WM for its next leg higher, as the stock could be set to explore fresh all-time highs.

wm stock jan 10

There's a lot of negativity that could unwind and help WM shares keep moving higher, too. For instance, short interest has surged higher in the past six months, including a 16.6% increase in the last reporting period alone. More upside from Waste Management could prompt a quick exit from these bears, a potential boon for the equity.

Plus, puts have been unusually popular recently, driving WM's Schaeffer's put/call open interest ratio (SOIR) to 1.36. This reading ranks in the 100th annual percentile, showing how rare it is to see such a put-skewed approach. Tailwinds could ensue should these traders close their positions.

Given we're about a month out from earnings, it could be the perfect time to pick up premium on WM. This is according to its Schaeffer's Volatility Index (SVI) of 15%, which ranks in the 18th annual percentile.

Lastly, our recommended call has a leverage ratio of 10.8, and will double in value on a 8.6% gain in the stock.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this WM commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.


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