Westwater Resources Inc (NASDAQ: WWR) surged 40% higher on Tuesday as call option volume exploded. The option activity occurred as the inauguration approaches and trades are being made on the potential Biden policies. One of the areas that is looking up is electric power and battery production. As you think about who makes batteries, don’t overlook who mines the materials that make them.
Who is WWR?
WWR is a diversified energy materials development company. In short, they explore have interest in lithium, graphite, and vanadium deposits in the United States. This company recently sold off its uranium assets in order to focus their efforts on the battery-grade graphite product business.
Christopher M. Jones, President and Chief Executive Officer of Westwater discussed the change in direction:
“The Coosa Graphite Project in Alabama is perfectly timed to take advantage of the advances in the electrification of our transportation system and in the grid electricity storage for renewable energy, both here in the United States and the rest of the world. These systems need graphite as a critical component – and our development plan puts battery-grade graphite in the marketplace in FY2021 and accelerates Westwater’s path to cash flow in FY2023. Completing the transformation of the Company from its uranium past to its graphite future is good for business and provides value for our shareholders.”
WWR Option Activity
The call option activity on WWR was over 9.4 times the 5-day average with over 46,000 contracts traded. The put-to-call ratio was 0.072 and 44% of the calls filled at the ask price. Here is a breakdown of the option activity in WWR:
- 25,000 19 FEB 21 calls mostly BOT @ $0.30 to $1.30 against open interest of 6,917
The activity was spread throughout the day. Most spikes in call volume occurring on upward movements in the stock and option price. Of course, tomorrow's open interest will see how much of it stuck.
WWR Technicals
The share price of WWR is quite volatile. The stock made a huge rally in September to early October from $1.34 to $14.50. The announcement about the uranium asset sales occurred on January 5, 2021 and has left the company with over $50 million in the company’s treasury.
Today’s move is a breakout from the symmetrical triangle that has been developing since early November. The width of the triangle gives a projected target of around $10, which is near the 61.8% retracement of the October sell-off. A break above that level would indicate a 100% retracement back to the October high of $14.50.
Conclusion
Stocks like WWR can be a wild ride, but with a small amount of capital can still make a difference with the large potential movement. The option activity, breakout in the share price, and the business focus makes this stock, well, interesting. Whether they can make money will determine the long-term potential, but the near-term appears bullish.
Wondering when to hedge? See how unlocking the Vomma Zone can help you better understand when volatility is about to rise.
Not a subscriber? Become a TheoTrade member.