Unusual Options Activity: Cameco (CCJ)

Shares of uranium producer Cameco (CCJ) have continued their strong move higher this year. One trader sees that rally continuing into next year.

  • Special: This Company’s Share Price has Increased 1650% Since 2016
  • That’s based on the March $33 calls. With 129 days until expiration, 15,000 contracts traded against an open interest of 175, for an 86-fold jump in volume. The buyer of the calls paid $2.17 for the trade.

    Part of the move higher comes following a plan from China announcing the creation of more nuclear power plants. And there are few ways to invest in uranium plays, of which Cameco is one of the larger companies to bet on.

    • This Company’s Share Price has Increased 1650% Since 2016.

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    This option will move in-the-money if shares rise another 22 percent from their current price near $27.65, already a 52-week high for shares.

    Action to take: Uranium prices are likely to continue higher, which should benefit Cameco. Shares are mostly moving based on uranium prices, as the company isn’t currently profitable right now. Investors bullish on the space can buy shares, but with a current yield under 0.3 percent, they won’t be too well paid to wait.

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  • Traders may like the calls, which have a decent amount of time to play out, and have a strike price that shares could jump to in the coming months given the market’s uranium fever. Look to take quick profits if shares move in-the-money, or if the options more than double. Commodity-driven trades can be prone to sharp pullbacks.

     

    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.