Cameco shares are at their highest point ever as the U.S. plans to increase its uranium reserves. This rise follows growing interest in uranium and nuclear power after COVID, driven by the need for green energy and the demand from AI technology. Shares of Cameco, a Canadian uranium mining company, have soared and are now valued at 16 times their lows during COVID. This jump shows a significant breakout from a classic megaphone pattern, but the shares are close to their expected target. However, spot uranium prices are still below the peaks seen in January 2024.

U.S. Increases Uranium Stockpile

The news about the U.S. boosting its uranium stockpile is a strong positive sign for producers in the U.S. and its allies. Cameco shares jumped to a record high following this announcement, continuing a strong trend. For options traders, this spike likely increased implied volatility, making options pricier. The stock is nearing a technical target after a major breakout, which means caution is needed. It’s important to remember that current spot uranium prices are still around $88 per pound, below the highs from January 2024. This discrepancy between the rising stock price and the lower commodity price could offer opportunities. Given the high cost of options now, traders might consider bull call spreads to express a positive outlook while controlling costs. This strategy involves buying a call option at a lower price and selling one at a higher price, allowing profits from a steady increase. While this limits potential earnings, it significantly reduces entry costs and risks if the stock does not move.

Securing Gains in a Volatile Market

For those who have held onto their stocks after a remarkable 16x increase since 2020, now may be a good time to secure profits. Buying protective puts or using collar strategies can help lock in profits while still leaving room for some gains. This protects against a potential dip, especially if the wider market weakens. The long-term outlook remains strong, driven by the rising electricity demand from AI data centers. The IEA predicts this demand will nearly double from 2022 levels by mid-2025. This basic demand, along with the U.S. government’s efforts to ensure a supply of non-Russian uranium, provides a solid foundation for the sector. We see this as a major trend supporting nuclear energy investments for many years ahead. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now