Seeking Alpha

Dr. Kris'  Instablog

Dr. Kris
Send Message
Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
My company:
Stock Market Cook Book
My blog:
Stock Market Cook Book
  • A low risk/high reward uranium play  0 comments
    Mar 21, 2011 5:26 PM | about stocks: URA
    One way to play the rebound in uranium
    Tags: URA, commodities, options, call-debit spreads

    The Global Uranium ETF (NYSEARCA:URA) is definitely on the rebound. After having dropped 40% from it’s recent $22 high, it held support at $13.50 during last week’s nuclear meltdown. Last Friday, the stock gapped up on heavy volume only to continue its upward push (+8%) today.

    Options volume has increased both on the call and the put sides (maybe put positions were closed out). There’s enough open interest in the April calls to warrant a viable play.

    The April 17.5/20 call debit spread sports a very nice risk/reward profile.
    April 17.5 Call @ $0.45 (OI = 380)  [Buy]
    April 20 Call @ $0.10 (OI = 400)     [Sell]
    Net debit = $0.35 per contract

    In this example you’re risking $0.35 to make $2.15 ($2.50 – $0.35). That’s a 6:1 reward to risk, but remember that you can lose all of your investment should the stock fall below $17.50 at expiration. Your breakeven point is at $17.85.

    The daily chart of the URA is shown below.

Back To Dr. Kris' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • Miners ready to take a break? Topping tail seen in $XME indicates buying pressure drying up.
    about 13 hours ago
  • RIP: Just found out that long-time voice of SNL, Don Pardo, passed away at 96. A truly distinctive voice.
    about 15 hours ago
  • A European vacay just got cheaper: USD $UUP popping above $21.80; Brit pound $FXB & euro $FXE breaking major support.
    about 15 hours ago
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.