Unusual Options Activity: Cameco (CCJ)

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  • Shares of uranium mining giant Cameco (CCJ) have risen in recent sessions. At least one trader expects that uptrend to continue. That’s based on the July 2021 $20 call options. Those options saw over 3,230 contracts trade recently, a 20-fold rise in volume from the prior open interest of 161.

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  • Expiring in 220 days, the options would move in-the-money if shares rose about 70 percent higher from their current price near $11.70. The trader paid $0.34 to make the trade.

    Shares have traded as low as $5 in the past year, set during the market crash. The recent spike in shares has sent the company’s share price well over its recent trading range closer to $10. Over the past five years, shares have never traded over $14.

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    Action to take: Given the challenges facing uranium, the uptrend is unlikely to send shares as high as $20, barring some unusual event like a short squeeze. Given the small amount of short interest in Cameco shares, that seems unlikely.

    It’s more likely that shares will drop back to their normal $10 range in the coming months. The March 2021 $10 puts, last carrying a bid/ask spread around $0.45, look like a better bet here. They’re likely to surge on a drop in shares in the coming weeks, offering investors a mid-to-high double-digit return.

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