WM Butterfly Strategy
WM (Waste Management, Inc.), in the Industrials sector, (Waste Management industry), listed on NYSE.
Waste Management, Inc., through its subsidiaries, provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations. As of December 31, 2021, the company owned or operated 255 solid waste landfills; 5 secure hazardous waste landfills; 96 MRFs; and 340 transfer stations. It also provides materials processing and commodities recycling services; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998.
WM (Waste Management, Inc.) trades in the Industrials sector, specifically Waste Management, with a market capitalization of approximately $86.92B, a trailing P/E of 31.23, a beta of 0.50 versus the broader market, a 52-week range of 194.11-248.13, average daily share volume of 2.1M, a public-listing history dating back to 1988, approximately 62K full-time employees. These structural characteristics shape how WM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.50 indicates WM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. WM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on WM?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
Current WM snapshot
As of May 15, 2026, spot at $220.18, ATM IV 22.50%, IV rank 56.52%, expected move 6.45%. The butterfly on WM below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this butterfly structure on WM specifically: WM IV at 22.50% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 6.45% (roughly $14.20 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated WM expiries trade a higher absolute premium for lower per-day decay. Position sizing on WM should anchor to the underlying notional of $220.18 per share and to the trader's directional view on WM stock.
WM butterfly setup
The WM butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With WM near $220.18, the first option leg uses a $210.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WM chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 WM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $210.00 | $12.20 |
| Sell 2 | Call | $220.00 | $6.10 |
| Buy 1 | Call | $230.00 | $2.13 |
WM butterfly risk and reward
- Net Premium / Debit
- -$212.50
- Max Profit (per contract)
- $695.36
- Max Loss (per contract)
- -$212.50
- Breakeven(s)
- $212.13, $227.88
- Risk / Reward Ratio
- 3.272
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
WM butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WM. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$212.50 |
| $48.69 | -77.9% | -$212.50 |
| $97.37 | -55.8% | -$212.50 |
| $146.06 | -33.7% | -$212.50 |
| $194.74 | -11.6% | -$212.50 |
| $243.42 | +10.6% | -$212.50 |
| $292.10 | +32.7% | -$212.50 |
| $340.78 | +54.8% | -$212.50 |
| $389.47 | +76.9% | -$212.50 |
| $438.15 | +99.0% | -$212.50 |
When traders use butterfly on WM
Butterflies on WM are pinning bets - traders use them when they expect WM to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
WM thesis for this butterfly
The market-implied 1-standard-deviation range for WM extends from approximately $205.98 on the downside to $234.38 on the upside. A WM long call butterfly is a pinning play: it pays maximum at the middle strike if WM settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WM IV rank near 56.52% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on WM should anchor more to the directional view and the expected-move geometry. As a Industrials name, WM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WM-specific events.
WM butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. WM positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WM alongside the broader basket even when WM-specific fundamentals are unchanged. Always rebuild the position from current WM chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WM?
- A butterfly on WM is the butterfly strategy applied to WM (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With WM stock trading near $220.18, the strikes shown on this page are snapped to the nearest listed WM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WM butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the WM butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 22.50%), the computed maximum profit is $695.36 per contract and the computed maximum loss is -$212.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WM butterfly?
- The breakeven for the WM butterfly priced on this page is roughly $212.13 and $227.88 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current WM market-implied 1-standard-deviation expected move is approximately 6.45%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WM?
- Butterflies on WM are pinning bets - traders use them when they expect WM to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current WM implied volatility affect this butterfly?
- WM ATM IV is at 22.50% with IV rank near 56.52%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.