Uranium producer Cameco (CCJ) has been steadily trending higher all year, with shares up 107 percent over the past 12 months. One trader is betting on a final rally to end the year.
That’s based on the December 29 $52 calls. With 14 days until expiration, 20,146 contracts traded compared to a prior open interest of 136, for a 78-fold jump in volume on the option trade. The buyer of the calls paid $0.15.
Cameco recently traded for about $45.50, so shares would need to rally over 14 percent in the next two weeks for the trade to move in-the-money. It would also mean breaking well over their 52-week high of $46.76.
Uranium prices have been soaring this year as new reactors have increased demand. Cameco has seen revenues rise by 48 percent.
Cameco isn’t cheap, with shares trading at 27 times forward earnings. But it’s the largest way to play the uranium trend.
Action to take: Shares are likely to continue to trend higher in the months and years ahead, not just weeks.
That means long-term investors can still get a bargain here. Shares pay a 0.2 percent dividend right now, which may increase with earnings over time.
For traders, the December 29 calls may get a good one-day pop in the next week or so. It’s unlikely they’ll move in-the-money. It’s a good fit for aggressive traders.
Less speculative traders may want to look for a Cameco option further out into 2024 for continued 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.