With so many companies being given a pass this earnings season, unfortunately for investors Cameco Corp (NYSE: CCJ) wasn’t one of them. The company finished over 12% lower on the session and only minimally recovered off the low. While the company missed analyst estimates by a significant margin, there was a silver lining to the report and option traders may be seeing it based on Wednesday’s activity.
The major culprit that impacted the earnings was an additional $37 million in care and maintenance costs associated with COVID. COVID-related issues extended to the closure of their Cigar Lake mine that was closed a while ago because of COVID risks. The company plans to open the mine in September. The backdrop that is indicating future strength is the continued bullishness in the uranium market and the future growth of nuclear power.
On Wednesday, the options market responded with several large trades that were bullish. The call activity was 15 times the average and the put option activity was over five times the average. Over 60% of the put volume was filled at the bid and 44% of call volume was filled at the ask. Buying calls and selling puts are bullish trades. The contract that had the most activity was the 18 SEP 20 $12 call option that traded over 50,000 contracts, mostly long activity, against an open interest of 9,191.
Here are links to our latest unusual option activity reports.
Action to Take: The near-term expectation for the price is a retest of the $12 high.
Option traders may want to consider a an 18 DEC 20 11/14 long call vertical for around $0.75 or less.