Unusual Option Activity: Denison Mines (DNN)

Uranium producer Denison Mines (DNN) handily beat the market over the past year, gaining 52 percent. One trader sees shares trending higher in the months ahead.

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  • That’s based on the July $2.50 calls. With 182 days until expiration, 28,597 contracts traded compared to a prior open interest of 242, for a massive 118-fold rise in volume on the option trade. The buyer of the calls paid $0.25 to make the bullish bet.

    Denison shares recently traded for about $2, so the stock would need to rise $0.50, or 25 percent, for the option to move in-the-money.

    Shares would also need to break to a new 52-week high past $2.12.

    While uranium prices trended higher last year, Denison saw little change operationally. Revenues even dropped by 9 percent. And as a smaller mining operation, the company continues to struggle with profitability.

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  • However, if uranium prices keep trending higher and stay higher, shares are likely to keep trending higher.

    Action to take: Speculative investors may like shares of the small cap company here, as a continued play on rising uranium prices.

    For traders, the July $2.50 calls may not move in-the-money, but it’s the right direction for shares right now. The option can likely deliver high-double digit gains or better in the months before expiration.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.


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