Shares of uranium producer Cameco (CCJ) have been trending higher as traders have become interested in the commodity. One trader sees substantial upside ahead in the coming weeks.
That’s based on the May $40 calls. With 40 days until expiration, 33,241 contracts traded against a prior open interest of 157, for a 212-fold surge in volume on the trade. The buyer of the calls paid $0.37 to make the buy.
With shares just over $28 recently, the stock would need to rise about 40 percent for the options to move in-the-money.
Shares are already up about 64 percent over the past year, even as the company has struggled with profitability. Traders see more upside as uranium prices move higher, which could finally make the company economically viable again.
Action to take: Shares have been attractive for some time, as a play on surging commodity prices. Following geopolitical events, the space has become even more attractive for investors, and with no direct way to play uranium, this industry leader will continue to attract attention. That’s even as shares yield a paltry 0.3 percent.
For traders, the option is unlikely to move in-the-money. But it’s cheap enough to offer triple-digit returns in the coming weeks if interest in the space continues to drive the share price higher.
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.