Cameco (CCJ) Might Be a UFO!
If the U.S. Health Secretary can swim in sewage, I don’t see why I can’t swim in toxic waste. At least I’ll have the chance of gaining superpowers.
Today we’ll be discussing a uranium company. But first…
What the Word on the Street?
The stock market is largely lower today. Tariff concerns are starting to ramp up and since we’re near record highs, probably a bit of profit taking too.
I wrote about Rigetti (RGTI) yesterday, and it‘s fallen ~5% today as of me writing this. I would attribute that to the Russell (small caps) declining over ~1% today. There hasn’t been any notable news for RGTI, fundamental change, or new analyst ratings, so I’m not concerned. I was almost tempted to make another trade, but I’m still above my strike and I’ll just monitor for now. I typically like to scoop up trades when I feel a stock is being unfairly punished by the market, as investors definitely have the tendency to overreact (in both directions). Regardless, I’m exposed enough to quantum technology for the moment.
Cameco Corp. (CCJ)
What Is It?
“Cameco Corp. engages in the provision of uranium. It operates through the Uranium and Fuel Services segments. The Uranium segment is involved in the exploration for, mining, milling, purchase, and sale of uranium concentrate. The Fuel Services segment deals with the refining, conversion, and fabrication of uranium concentrate and the purchase and sale of conversion services. The company was founded in 1988 and is headquartered in Saskatoon, Canada. The listed name for CCJ is Cameco Corporation.”
Why Is It a Possible UFO?
Primarily its current share price relative to its fair value, what other option traders expect, and recent energy trends are the highlights.
What About Recent News/Trends?
There isn’t anything particularly newsworthy going on recently for this particular company, but the trend of nuclear energy is the key. Nuclear energy is in demand as countries seek ”cleaner” energy sources to meet increasing demand. Recent technological innovations (AI) consume vast amounts of energy and with subsidies being cut in the U.S. for clean energy like wind and solar, nuclear energy has been gaining popularity.
What’s the Current Price?
The current price is hovering around $72.74 today. It’s had a great run so far this year. It’s down on the week around ~1%, but in the past 3 months alone CCJ has risen ~88%! That’s impressive, and actually another stock I might normally shy away from, but I think it’s still attractive at its current price.
What‘s the Fair Value?
I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…
Since CCJ’s most recent earnings report on 05/01/2025, it has received 4 ratings and taking the average the fair value might be somewhere around: $79 (Actually $79.57, but I’m rounding down). All ratings are a buy. The lowest being $65, the highest being $100. One of the 4 weirdly has cents in it? I think Gordon doesn’t like rounding.
What Do Options Traders Think?
Calls are trading over equidistant puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $70 put it says $2.77, it’s $3.60 for the equidistant call at $75.
The premium (the credit you receive for executing the trade) is currently less for selling puts, as opposed to selling calls. Basically because of that, option traders expect the stock to go up, rather than down.
What’s the Trade?
My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value.
Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.
It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral.
CCJ does offer a dividend, but the yield is pretty low at 0.16%, but that’s better than nothing!
So if you saw the most recent image above, I already STO (sold to open) 2 contracts of the $62 put for the August 22nd expiration. I like to have a DTE (Days to Expiration) that is around ~45 days. I luckily managed to get a more favorable fill than the above image implies earlier in the morning before the stock rose later in the day.
When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.
Wait…Where Are the Candlesticks? And All the Other Indicators?
I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing.
As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.
Disclosure
- I currently have open trades with CCJ (as mentioned in this post).
- No trade is a sure thing. There is always risk involved.
- This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.