Options Alert: Bulls Remain Active in Key Uranium Name


Uranium miner Cameco has rallied along with the price of the radioactive metal, and at least one big options traders is looking for the move to continue.

This unusual activity was detected yesterday in the Canadian company:

  • 10,000 October 42 calls were purchased for $0.69.
  • 10,000 September 40 calls were sold for $0.08.

The trade size was below open interest in the September contracts but not the Octobers. That suggests an existing long position expiring this week was closed and rolled to next month.

Calls fix the price where investors can buy a security. They can appreciate when a stock rallies but will expire worthless if the shares remain below the strike price. Puts are the opposite, setting the price where a security can the sold, which can make them gain value to the downside.

Wednesday’s transaction was likely the work of an investor who wants to profit from CCJ climbing but doesn’t want to commit a large amount of capital. Their position potentially controls 1 million shares for less than 2 percent of the cost.

Cameco (CCJ), daily chart, with key indicators and events.

CCJ rose 2.1 percent to close at a 12-year high of $38.93 yesterday. The stock is up 71 percent so far this year. Its current rally began as the U.S. Senate advanced a nuclear-energy bill in late May. The shares got a further boost on July 26 after a coup in Niger threatened uranium supplies from the West African nation.

Overall option volume in CCJ was more than twice the average over the last month, according to TradeStation data. Calls accounted for a bullish 84 percent of the total.

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