Yesterday the news came out that Constellation Energy (CEG) and Meta had come to agreement to build out a uranium energy plant. Most telling, CEG gapped sharply higher to proceed to sell-off the remainder of the day. We see this as a very good thing long-term fundamentally for the uranium space (CCJ). However, also a signal of short-term exhaustion. So, we have a short put in CCJ, we are converting it into a 1×2 put spread through buying a put spread today. This will improve the position further if the stock can pullback in price in the near term. If the stock goes higher, then this adjustment will result in a small profit when you consider what we collected for the short put originally and what we are paying for this put spread today.
Buy to open: CCJ June 20th (monthly) 58.00 strike put (ratio of 1)
Sell to open: CCJ June 20th (monthly) 54.00 strike put (ratio of 1)
Debit: 1.00
We collected 1.15 credit for selling the 54 strike put previously. This put spread costs us 1.00 debit. So, we can now make anywhere from +0.15 profit up to +4.15 profit if the stock falls lower in price.