Waste Management Plummets 3.92%: What’s Behind the Sharp Decline?

Summary
• Waste Management (WM) trades at $205.39, down 3.92% from its previous close of $213.77
• Intraday range spans $197.25 to $208.80, reflecting volatile session
• Q3 earnings miss and revenue shortfall drive immediate sell-off
• Free cash flow growth of 13.5% YoY contrasts with recycling segment struggles

Waste Management’s stock plunged nearly 4% in a volatile session marked by a $11.52 drop from its intraday high. The sharp decline follows a Q3 earnings report that missed estimates on both revenue and profit, with management guiding to the low end of full-year revenue expectations. Despite robust free cash flow and core business strength, recycling headwinds and softer healthcare revenue have triggered a reevaluation of near-term prospects.

Earnings Miss and Commodity Woes Spark Sell-Off
Waste Management’s Q3 results fell short of expectations, with adjusted EPS of $1.49 versus $2.08 estimated and revenue of $6.44B against $6.70B projected. The $260M revenue miss was driven by declining recycled commodity prices and weaker healthcare solutions revenue. Management now anticipates full-year revenue at the low end of its prior range, citing ongoing pressure from commodity markets. While the core Collection and Disposal business delivered record margins and $821M in free cash flow, the recycling segment’s $60M revenue decline underscored structural challenges. The stock’s sharp intraday drop reflects investor concerns over near-term visibility and margin resilience.

Waste Sector Mixed as Waste Connections Holds Steady
Waste Connections (WCN), a key peer in the waste management sector, traded flat with a -0.12% intraday move, contrasting WM’s sharp decline. While WM’s earnings miss highlights recycling-specific vulnerabilities, WCN’s stable performance suggests broader sector resilience. However, WM’s exposure to commodity-linked recycling revenue amplifies its sensitivity to market fluctuations, creating a divergence in stock behavior despite overlapping industry dynamics.

Options and ETF Plays for a Volatile WM Move
• RSI: 41.24 (oversold)
• MACD: -1.42 (bearish divergence)
• Bollinger Bands: Price at 212.38 (lower band), 216.92 (middle band)
• 200D MA: $225.94 (price below trend)

WM’s technicals signal a bearish near-term bias, with RSI in oversold territory and MACD trending downward. Key support levels at $213.74 (30D support) and $228.13 (200D resistance) will dictate short-term direction. The stock’s 13.5% free cash flow growth offers a floor, but recycling headwinds and commodity volatility remain risks. For leveraged exposure, no ETF data is available, but options provide tailored strategies.

Top Options Contracts:
• WM20251121P200 (Put, $200 strike, Nov 21 expiry):
- IV: 19.33% (moderate)
- Leverage Ratio: 102.42% (high)
- Delta: -0.297 (moderate sensitivity)
- Theta: -0.0073 (slow decay)
- Gamma: 0.0334 (high sensitivity to price moves)
- Turnover: 156,542 (liquid)
- Payoff (5% downside): $12.61 per contract
- Why: High leverage and gamma make this put ideal for a moderate bearish move, with liquidity ensuring easy entry/exit.

• WM20251121C210 (Call, $210 strike, Nov 21 expiry):
- IV: 19.53% (moderate)
- Leverage Ratio: 91.04% (high)
- Delta: 0.334 (moderate sensitivity)
- Theta: -0.1414 (rapid decay)
- Gamma: 0.0347 (high sensitivity to price moves)
- Turnover: 164,654 (liquid)
- Payoff (5% downside): $0 (out-of-the-money)
- Why: While a 5% downside invalidates this call, its high gamma and moderate delta position it for a rebound above $210, leveraging WM’s strong free cash flow narrative.

Trading View: Aggressive bears should prioritize WM20251121P200 for a 5% downside scenario, while bulls may test WM20251121C210 if WM breaks above $210. Position sizing should reflect the high leverage ratios and rapid theta decay.

Backtest Waste Management Stock Performance
The strategy’s performance evaluation is ready. Please review the interactive module below for detailed metrics, parameters and visualizations.Key stats for 2022-01-01 → 2025-10-28 (WM):• Total return of triggered trades: 28.7 % • Annualized return: 7.0 % • Max drawdown: 6.8 % • Sharpe ratio: 0.87 • Average trade: +2.6 % (wins +4.2 %, losses –1.2 %)Interpretation:1. The strategy captures moderate upside after sharp intraday sell-offs, with risk kept in check by tight exits. 2. Drawdown remains low (≈ 6.8 %), reflecting the protective stop-loss and short holding window. 3. Sharpe above 0.8 indicates risk-adjusted returns are acceptable but not exceptional; further filtering (e.g., require elevated volume with plunge) could improve edge. Feel free to drill into the module for trade-by-trade paths, equity curve, and distribution plots, or let me know if you’d like to test alternative thresholds or risk controls.

WM at Crossroads: Watch for $213.74 Support or Commodity Clarity
Waste Management’s sharp decline reflects a mix of structural challenges in recycling and near-term commodity volatility, but its core business remains resilient. The stock’s technicals and options activity suggest a pivotal test of $213.74 support, with a breakdown signaling deeper bearish momentum. Sector leader Waste Connections (-0.12% intraday) offers a benchmark for broader industry sentiment. Investors should monitor commodity price trends and management’s commentary on pricing power in the Collection and Disposal segment. For now, WM20251121P200 provides a high-leverage, high-gamma play on a potential 5% downside, while a rebound above $210 could reignite bullish momentum.