Convanta recently made headlines this week when the Morristown, New Jersey-based company released a statement that it had won a 20 year contract to to convert 800,00 tons/year of New York City’s solid waste into energy each year. The contract, which is set to take effect in 2015, will run through 2035.
The Trade:
Selling 1 CVA Mar 22.5 Call at $0.75 for every 100 shares of stock bought at $21.52.
The trade will be profitable so long as the stock stays above $20.87. Maximum profitability will be achieved should the stock be trading at $22.50 upon March expiration, so the call will expire unexercised and the trader will retain ownership of the stock. The trader would profit a total of $1.73 ($0.98 stock gains + $0.75 credit from the Call sale).
