Ahoy-hoy Apes!
So this month I've noticed some ridiculously large call option buying on $CCJ which is Cameco - the 2nd largest Uranium producer in the world.
Disclaimer: I am definitely not a nuclear tycoon who owns said nuclear stock or nuclear plant...
The stock closed down over 2% to $17.21 on Friday but here is what the Open Interest on the 16 April calls (expiring this Friday) looks like:
Yes, you read that correctly. There's currently almost 130,000 calls open at over a 6:1 ratio to puts with expiration in five trading days.
There have been a few good DD posts on WSB in the past about $CCJ Cameco and Uranium. TLDR: uranium looks to finally be starting a bull run after a 10 year bear market and some of the big-name banks are predicting that the price of Uranium could double within the few years due a shortage of uranium and an increase in demand due to 'clean energy' requirements.
For all you fellow autists, here is the current daily chart of CCJ which is already clearly in an uptrend since December:
On Friday after-hours Cameco released the news that they will be reopening their Cigar Lake mine in northern Saskatchewan, Canada. Cigar Lake is the world's highest grade uranium mine (Cameco owns 50% of it) and the mine has been shut since December due to Covid-19.
The closure is costing $CCJ $8-$10 million per month alone. In 2019 CCJ's share of the mine's uranium was 9 million pounds and in a Covid-disrupted 2020 it was still 5 million lbs. They haven't mined any in 2021 so far but have projected producing 5.5 million lbs.
Considering that they currently receive about $31-$36 per pound of uranium, this reopening should fundamentally be great news for the company as it would represent about 10% of their $1.8 billion revenue of 2020.
But the market may actually interpret this as bad news as the theory was that the closure was supposedly driving the spot price of uranium higher, even though Cameco have stated that they'll be using any mined uranium from Cigar Lake to fulfil existing contractual obligations (i.e. not flood the market with more cheap uranium to drive the price back down).
What does this all mean?
The $24 and $25 calls probably have no chance of printing because whoever bought them did so on the day of the $19.71 high on 16 March (still interesting they haven't sold any). Oops.
However there has been quite a bit of movement in the last few days on the $20 calls in particular as well as the $19.
Also just of interest there is now almost 25,000 open interest on the May 21 $25 calls.
So it could just mean some beautiful YOLO'ing retard has blown hundreds of thousands of dollars on $19-$25 calls that are all going to expire worthless. Totally wasn't me.
But....
Say the stock price spikes today or tomorrow due to Friday's news or because some of the uranium mines in eastern Europe are closing due to rising Covid cases or just because whoever owns all those open calls is trying for a gamma squeeze - or for any other reason.
Bringing the call options from $18 up to $20 into play creates a potential liability purchase of over 5,000,000 extra stocks if whoever sold the calls is short the stock.
Considering that the total average daily volume is 6.66M (seriously. lol), things could start moving very quickly...
Then considering there's an extra potential liability purchase of 7.2M stocks for the $21-$25 open call options and things really could get interesting if a whale or a group decided to start driving up the stock price and create a gamma squeeze.
Of course the price could tank today because of the AH news and make all of this a moot point. But I figured it was worth watching this one. The implied volatility for the options is really low - about 55% - so a quick price movement would bring big rewards to those holding stock and/or options.
What's going to happen to $CCJ this week?
Probably nothing. Heck, it may even retest the lower trendline and 50 EMA in reaction to Friday's news.
But keep watching this week for any sudden run and then again for May if someone tries to make those $25 calls print next month. There is a chance that Cameco stock is about to go nuclear.
NOTE: This is my 2nd post on WSB. Long-time lurker & decided to make occasional DD posts. Last month when I made my first post & it wasn't about GME I was called a shill & a bot. If you think I'm a shill bot because I don't post about GME then congratulations! You've already cracked my secret identity with that giant brain of yours.
Hope you enjoyed the DD.
Lots of love,
Your Friendly Neighborhood Shill Bot