Speculators are heavily investing in short-term call options for rare earth elements stock Energy Fuels Inc. (UUUU). This comes after a joint deal announcement with Astron Limited and Australian government support for the Donald Project in Australia. UUUU stock has surged to $20.80 from $15.35 before the deal.

The project involves shipping rare earth elements to Energy Fuels’ U.S. facility after a $520 million investment. Production is expected to start in the second half of 2027. Speculative trading in UUUU call options is high, with buyers expecting a 48% rise in the stock price to over $30 within a month.

Investors are speculating on a major announcement that could drive UUUU stock even higher in the next 30 days. However, probability analysis suggests that shorting covered calls could be a safer play, offering an 8.3% yield and potential for a 39.4% return if the stock rises to $29.00. This strategy could yield a total return of almost 48%.

Using probability to assess expected returns, buying calls could result in a net expected return of 25.7%, while shorting covered calls may provide an expected return of 12.3%. The decision to buy calls or short covered calls depends on the probability of UUUU doubling in the next month. Shorting covered calls becomes more attractive with lower chances of UUUU doubling.

Read more at Barchart: Heavy Activity in Energy Fuels Inc Call Options