Unusual Options Activity: Cameco (CCJ)

Shares of uranium mining giant Cameco (CCJ) have had a stellar year thanks to a strong commodity market and rising uranium prices. One trader sees that trend continuing in the first half of this year.

  • Special: This Stock Can Pay Up To 35% Dividends
  • That’s based on the June $32 calls. With 146 days until expiration, 6,041 contracts traded compared to a prior open interest of 179, for a 34-fold increase in volume. The buyer of the calls paid $0.85 to make the trade.

    With shares last going for about $22, the stock would need to rise just over 45 percent to hit a price $10 higher before the option expires in June.

    Shares of the company have already rallied 78 percent in the past year, so it would take a big move higher in the commodity space. However, as shares are in an uptrend, this option in an inexpensive way to play that trend higher.

    Action to take: Investors may like shares here, but strictly as a momentum play. The company is still coming off some losses, and hasn’t been profitable in three of the last four quarters. Shares pay a 0.3 percent dividend for now, but without higher earnings, that dividend may not be sustainable.

  • Special: 1 Dividend Stock With a Record-High Yield
  • Nevertheless, traders may like the June calls. They’re inexpensive enough to potentially double, depending on how strong shares perform in the coming months. Traders should look for a reversal in the current uptrend to take profits on such a trade.

     

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