Chart courtesy of StockCharts.com

Just a quick note to update you on the progress of June 09 $25.00 PUTs that we purchased for $1.40 per contract (CCJRE) on Cameco Corporation (CCJ) recently.

Our assessment was that Cameco had ran ahead of itself as the above chart shows and that a pull back is now imminent. The trade started well when it closed up 40% the following day, however, Cameco’s stock price has since recovered resulting in the value of the PUTs dropping back to close at $0.95 on Friday. These options expire on 20th June 2009 so we don’t have a lot of time for the trade to work in our favour.

We are still looking for Cameco’s stock price to ease and head lower towards the $20.00 level, the MACD and the STO are heading south and the RSI remains high.

We will watch the action after the holiday in the US and if Cameco continues to improve than we will sell these contracts at a loss and go back to the sidelines. If the stock price does start to decline then the value of the PUTs should appreciate fairly quickly, so we may need to move fast.

Options are extremely volatile so please limit the amount of cash that you place into this sort of trade as you could lose it all if it goes wrong.
Sleep tight.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.