$CCJ bulls double money

Option traders are scoring big gains on upside positions in Cameco (CCJ) today.

On Jan. 30, Market Rebellion’s Unusual Activity Service identified the purchase of 20,000 March $8 calls for $0.57 and $0.58 with shares at $8.18. This was clearly a new position, as open interest in the strike was only 483 contracts before the trade occurred.

Those calls changed hands for as much as $1.45 so far today, at least 2.5 times their purchase prices. The stock rose 14.18% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

CCJ is up 4.89% to $9.23 this morning. The uranium producer beat earnings and revenue estimates on Feb. 7.