Options for stock investors. A better way to trade.

April 13th New Trade Alert – Cameco

New Trade Alert for (CCJ)

Cameco January $7.00 Call @$3.75 or less



Risk Rating: 2     (1 = lowest   5 = highest)


Season of reason has stocks stabilizing as fundamentals come back into focus with Q1 earnings announcements starting today.


I has been a long couple weeks for Bulls but it was only one month ago today that Tech posted ALL TIME forever highs.


Considering the politics and policy uncertainly with everything but the kitchen sink thrown at market holding here at unchanged for 2018 is an impressive feat.


S&P has tracked between 2550 and 2650 for the last three weeks getting closer to a convincing upside breakout. 


Reminder, every selloff in market history has bounced back to make new higher highs…


Crude oil has made a complete comeback to mark new three year plus highs to support beaten and battered energy sector stocks that had been left behind in the last years.



Nuclear power is projected to grow to a 750 Billion dollar business in the next decade.


Cameco is a major producer of uranium that has suffered on a straight down move under double digits.  


CCJ SunPower had been largely between $9 and $10 for the last year looking for $11 to confirm a trend change.  A quick dip to $7.50 put in the low. 


This was a $25 stock in 2014.





SunPower breakout above $10 targets the $16 midpoint of the multiyear drop.


Risk reward favors Bulls at these discounted levels.


Only a close below the $8 on a weekly basis would negate this bullish buying premise.



The Options Way: Unlimited Upside Potential with Limited Risk.

A SPWR long call option can provide the staying power for a market upturn.  More importantly, the maximum risk is the premium paid.


One major advantage of using long options instead of buying or selling shares is putting up much less money to control 100 shares — that’s the power of leverage.


Choosing an option can sometimes be a daunting task with all of the choices and expiration months and strikes.  Simply put, traders want to buy a high probability option that has enough time to be right.

The option strike price is the level at which you have the right to buy without any obligation to do so.  In reality, you rarely convert the option into shares. Simply sell the option you bought to exit the trade for gain or loss.  


There are two rules options traders need to follow to be successful.

Rule One:  Choose an option with 70%-plus probability


The Delta is a measurement of how well the option reacts to movement in the underlying security.  


It is important to buy options that payoff from only a modest price move.  There is no need to ONLY make money on the all but infrequent large price explosion.

Any trade has a fifty/fifty chance of success.  Buying options ITM options increase that probability. 


That Delta also approximates the odds that the option will be In The Money at expiration.


Buying better options is more expensive, but they are worth it — the chances of success are mathematically superior to buying cheap, long shot Out Of The Money lottery tickets that rarely ever pay off.  
With CCJ trading at $10.05 for example, an In The Money $7.00 strike option currently has $3.05  in real or intrinsic value.  The remainder of any premium is the time value of the option.

Rule Two: Buy more time until expiration than you may need. 


Time is an investor’s greatest asset when you have completely limited the exposure risks. 

Traders often buy too little time for the trade to develop.  Nothing is more frustrating than being right but only after the option has expired premature to the market move.


Trade Setup: I recommend the CCJ January $7 Call at $3.75 or less.





This option strike gives you the right to buy the shares at $7.00 per share,  a price level last seen in 2003, with absolutely limited risk.  


The January option has nine months for BULLISH development. 


An 81 Delta on this strike means the option will behave much like the stock.

The maximum loss is limited to the $375 or less paid per option contract.    The option upside is unlimited.


The CCJ option trade break even is $10.75 at expiration ($7.00 strike plus $3.75 or less option premium). That is less than 75 cents above the current price.

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