Uranium producer Cameco (CCJ) is up 60 percent over the past year. But shares are down about 20 percent in the past month. One trader sees shares resuming their uptrend in the coming months.
That’s based on the September $48 calls. With 190 days until expiration, 10,094 contracts traded compared to a prior open interest of 159, for a 63-fold rise in volume on the trade. The buyer of the calls paid $3.40 to make the bullish bet.
Cameco recently traded for about $42, meaning shares would need to rise about $6, or about 14 percent, for the option to move in-the-money.
Meanwhile, Cameco shares have a 52-week high of $51.33, set just a few weeks ago.
The past year has been strong for uranium demand and prices, and Cameco has seen revenues rise 61 percent. Uranium does not trade as a commodity, and as the largest producer, Cameco acts as a proxy for the space.
Action to take: Shares appear to be forming a base ahead of a move higher following their recent pullback. That makes the stock worth accumulating at current prices or on any drop lower ahead of a further push higher in the coming months.
For traders, the September calls are well positioned for a rebound in shares in the coming weeks and months.
Traders may want to take profits as shares near the 52-week high as that would likely be a place for the share price to slow down and retest.
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.