$CCJ call buyers score big

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

On Apr. 26, Market Rebellion’s UOA Service identified the purchase of 5,720 May $17.50 calls as part of a bullish roll for $0.49 with shares at $16.43. This was clearly a new position, as open interest in the strike was only 294 contracts before the trade occurred.

Those calls changed hands for as much as $2.70 this session, 5.5 times their purchase price. The stock rose 21.79% 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 was up at the close by 10.57% to $20.08. The uranium producer beat top line earnings expectations before the opening bell this morning.