In the wake of the 3^rd consecutive 4-decade high monthly CPI reading (7.9% YoY in February), an energy crisis in Europe, while Putin relishes in the nostalgia of the former Soviet Union at the expense of millions of Ukrainians and even his own Russian subjects, investors are looking towards the reminiscent cold-war era commodity, Uranium.

Cameco (CCJ Quick QuoteCCJ - Free Report) , the world’s most valuable publicly traded uranium business, has stood out on the options board with an unusually large level of short-term call options changing hands over the past few days.  CCJ has soared roughly 40% since its exceptional year-end earnings report last month, which drove a tidal wave of buy catalysts for Cameco’s underappreciated stock.

Record rates of commodity inflation, surging interest in clean nuclear energy options, and a marginally elevated possibility of nuclear war (even a 0.001% increase in probability is material) have traders flooding into this accelerating sector of interest with leveraged option plays.

Let’s jump on this uranium-fueled rocket with some short-term CCJ call options poised to go nuclear (pun intended).

The Trade

I’m looking at a few highly liquid CCJ option contracts which I quoted below (expiration, strike, position, & premium):

March 18^th $28 Calls @ $0.20

April 14^th $30 Calls @ $0.80

June 17^th $30 Calls @ $2.00

I’m holding CCJ March calls right now and am looking to buy these April contracts on a rollover basis (assuming I’m able to exit these March 18s at a favorable enough price), pulling profits off the table and redeploying the initial amount into April’s $30 Calls prior to March expiration next Friday’s (3/18).

This can be done into the June options (from April’s contract) if this trade continues to work in the months ahead. I recommend that you pull out of your near-term contracts when your predetermined technical targets are reached, or your downside loss prevention level is reached (both of which require some technical points to queue from), and redeploy when a buy signal presents itself (discussed further below)

The Chart

Shares of Cameco have officially run up into overbought RSI territory. However, the bullish channel we are trading in suggests that CCJ could be closer to $30 a share by end of week expiration (3/18) if this uptrend continues.

I will be pulling these March calls once we touch $28.50 and rolling them over to April once CCJ stumbles under overbought levels it has rallied deeper into, with $25.25 being the ideal entry point (shown by the 61.8% retracement below), which it hit bounced off of Monday morning (3/14).

CCJ’s ability to hold support at $26.60 (January high) amid this broad-based sell-off in public equities is a bullish signal.

Image Source: TradingView

The Catalyst

Cameco managed to leap back into profitability in its final quarter of 2021, which analysts see as a turning point for this leading Uranium producer that has been biding its time, stomaching over a decade of declining financials, to get to this momentum of renewed nuclear interest.

The world is building out its nuclear capacity with 325 nuclear power plant proposals (which would nearly double the required uranium) and 51 nuclear facilities under construction today to go live over the next 5-years. I expect the volume of atomic reactor proposals to accelerate in the coming months/years of energy-dependency-focused investments.

CCJ has rallied over 400% since it bottomed two years ago at the pandemic lows and still looks to have room to run from here. The existential crisis of our own mortality in the past 24-months of COVID-fueled fear incited overwhelming global attention on the health of our planet.

The zero-emission energy offering that nuclear sources generate is hard to ignore, and the next generation of investors are doing anything but.

Escaping The Nuclear Taboo

Nuclear power has been tabooed, with devastating blunders like the Chernobyl disaster, leaving society scared. At the turn of the century, there had been an uptick in nuclear interest, with prior nuclear meltdowns looking like antiquated blunders. Fears of uranium-driven power were revived in 2011 following the nuclear meltdown in Fukushima, Japan, despite the incident only resulting in one cancer-related death. 

Since 2011 uranium prices have fallen off a cliff due to slowing demand, but this past month has shown a reversal in this move. Nuclear power plants are much cleaner and more sustainable than fossil fuel-powered facilities. The existential threat that the pandemic posed to society is turning market participants toward sustainability, and nuclear power fits that profile nicely. 

Today, just 10% of the world's electricity is powered by 438 active nuclear reactors (20% of US energy supply, a figure that has remained stagnant for 2 decades), making it the second-largest source of low-carbon energy behind hydroelectric. The geopolitically driven price spikes in crude oil, natural gas, and coal have investors and regulators across the globe working harder than ever to become energy-dependent in the years ahead.

Final Thoughts

Nuclear power will be an essential element on the road to both energy independence and our long-term zero-emission objective.

Millennials & Gen Z’s have been casting their vote for this space’s revival in the public market. Cameco and other uranium plays like Global X’s Uranium ETF (URA Quick QuoteURA - Free Report) have been some of r/WallStreetBets’ favorites since WTI crude broke above $80/barrel last fall as the next generation looks towards posterity and this neglected sustainable energy source.

Now with WTI trading north of $100 a barrel, these individual retail traders are getting into CCJ with short-term call options that have catalyzed a leveraged upside in this leading global uranium producer’s recent price action.

The investing world is placing its bets on the future of energy. You don’t want to miss on this uranium run.

Happy Trading!

Dan