$CCJ call prices triple in hours

Option traders who opened bullish positions in Cameco (CCJ) this morning were collecting large gains by noontime.

Less than an hour after the opening bell, Investitute’s proprietary programs flagged the purchase of 16,000 July $11 calls for $0.12 to $0.20 with shares at $10.79. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 9,997 contracts.

Those calls traded up to $0.45 today, about 3 times their average purchase price. The stock rose 3.52% at the same time, showing how quickly options can far outpace gains in their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

CCJ is up 4.75% to $11.15 in late afternoon trading. Shares of the uranium producer have been grinding higher since the beginning of June.