Uranium producer Uranium Energy Corp (UEC), is down 2% over the past year, with shares down over one-third from their February peak. One trader sees the stock recovering to bounce higher into next year.
That’s based on the February 2025 $8 calls. With 154 days until expiration, 3,635 contracts traded compared to a prior open interest of 127, for a 29-fold rise in volume on the trade. The buyer of the calls paid $0.21 to make the bullish bet.
UEC shares recently traded for about $5.00, so shares would need to rally by $3.00, or about 60%, for the option to move in-the-money. Shares hit a 52-week low of $4.06 in early September and have been trending higher since.
Uranium prices have been rising. There’s increased interest in nuclear energy for AI projects and to take advantage of a new generation of safer, modular reactors that are coming online. However, that hasn’t translated to UEC’s bottom line over the past 12 months.
Shares are a speculative bet on uranium prices regaining some of their lost momentum. Uranium itself does not trade on the commodities market, unlike copper, gold, or oil.
Action to take: Investors interested in the commodity space may like shares here. The stock is moving off its September bottom, and could be in the early stages of a new uptrend. Commodity stocks tend to have big returns when bought near bottoms.
For traders, the February 2025 $8 calls are aggressive in terms of price appreciation, but they have ample time for a year-end rally to play out. The options can likely see mid-to-high double-digit returns.
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 company mentioned in this article.