Hey There Income Hunters,
Europe is in serious trouble, and the continent will look to uranium to ease its pain.
The last thing Europe and the UK want to do this winter is rely on foreign countries, namely Putin’s Russia, for their energy
The surging electricity prices in France, meanwhile, are forcing the country to cut back on its reliance on imports. France likes to be independent anyway … I mean, did you ever ask a local for directions in Paris? They pretend they don’t understand English!
So, what do you think they are going to do now?
They, too, will turn to uranium, the green back-up option of choice in Europe.
Check out this international headline …
“U.K. backs nuclear, seeks end of fossil fuel-power by 2035. Europe doesn’t want to be reliant on energy imports.”
Today I’ll show you what I am buying and how best to play the next phase of the uranium bull market …
Uranium Makes the Grade
First let’s take a look at the Sprott Physical Uranium Trust.
Sprott has been the biggest buyer for Uranium because their trust has the ability to launch $1.3 billion in new units.
The fund prices traded at a huge premium to net asset value initially and locked in profit for Sprott, so they were issuing new units and buying the uranium to back it. Then the Sprott price went to a discount and Uranium prices and miners corrected …
As you can see below the Sprott price is back to premium, so I think we could see a renewed rally from these levels …
North Shore Global Uranium ETF (URNM)
I am going to buy URNM today after having a great run with Denison Mines and Uranium Royalty Corp. shares. Now it’s time to play with some leverage, options style.
I like URNM here because the ETF holdings provide a more even diversification across producers and service providers than the Global X Uranium ETF (Ticker: URA) does.
Let’s check out the chart …
URNM has burned off the oversold condition and sits above the high from June, which is the closest support …
The fundamentals are so powerful for uranium and the technicals are bullish …
I always like doing vertical spreads that give you a risk/reward of at least 3-1, and I found a good one for the Nov. 19 expiry, which is the shortest I would go for this trade.
So the play is …
- BTO $URNM Nov19 86/94 CS for $1.90
Your maximum profit is $610 per contract against your maximum loss of $190 for a max profit of 321%
A nice trade, especially when you consider the straddle implies a potential move of $13 …
Here is the risk profile:
Bring It Home
Yesterday was another sign that the market will make it through this tough period — assuming we get the spending bills and debt ceiling passed.
I think we will, and then we should see a nice boost from the reopening.
Inflation will continue to accelerate, as well, so energy and commodities will continue to be the greatest performers …
Get ready for the holiday and the market rush!
And as always …
Live and Trade With Passion,