Shares of uranium producer Cameco (CCJ) were on a strong uptrend until June, then slid. In recent days, they’ve moved higher. One trader sees that trend continuing in the weeks ahead.
That’s based on the October $21 calls. With 39 days until expiration, over 5,065 contracts traded against an open interest of 155, for a 33-fold rise in volume. The buyer of the calls paid about $1.32 on average.
Shares are just under $21 right now, about $1 under their old 52-week high. If shares move higher, they could break through to new highs in the weeks ahead.
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The uranium miner isn’t making a profit at the moment, but rising uranium prices and strong demand for energy production have allowed shares to rise 76 percent in the past year.
Action to take: Investors may want to consider shares, even near 52-week highs. With a strong uptrend in place, shares could keep moving higher in the months to come. The company pays a small dividend right now of about 0.4 percent, but could raise that payout when it returns to profitability.
For traders, the October calls play the current short-term trend higher, and stand a good chance of both moving in-the-money and seeing high-double to low-triple digit returns. Look for the trend to start wavering to take profits.
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 of the companies mentioned in this article.