Wednesday’s options trading was interesting.

While there were 1238 unusually active call and put options--generally, any day over 1,000 is a busy one--the highest Volume to Open Interest (Vol/OI) ratio was 75.93, not nearly as high as you’d expect given the day’s options volume was 54.3 million, 2.6 million higher than the average daily options volume.

Despite the lack of Vol/OI ratios above 100, it was an exceptionally bullish day with calls accounting for 62% of the action. 

NuScale Power (SMR), the developer of small modular reactor (SMR) technology, had five unusually active options yesterday, with three in the top 25 for Vol/OI ratios. Keeping with the trend of the day, four of five were calls.    

Looking at the top two unusually active options, it screams strangle. Here’s why I like the bet. 

NuScale’s Business Opportunity

The company reported Q1 2025 results on Monday after the close. It delivered results beyond Wall Street’s expectations, lifting its stock by 21% in Tuesday trading. As a result, its stock is now up nearly 30% on the year, and 230% over the past 12 months. 

The promise of NuScale’s technology is why the company’s market cap is 135x its trailing 12-month revenue of $49 million as of March 31. 

I wouldn’t typically write glowingly about a company whose stock was well into nosebleed territory, but it’s not a secret that nuclear energy is a popular trend currently. 

On May 9, reports surfaced that the Trump administration was drafting several executive orders to meet the rising need for electricity generation in the U.S. 

“‘As American development of new nuclear reactor designs has waned, 87 percent of nuclear reactors installed worldwide since 2017 are based on Russian and Chinese designs,’ reads one draft order, titled ‘Ushering In a Nuclear Renaissance,’” the New York Times reported. 

“‘These trends cannot continue,’ the order reads. ‘Swift and decisive action is required to jump-start America’s nuclear renaissance.’”

As the company continues to push toward full-scale commercialization of its SMR technology, the need for nuclear power appears significant given the rapid global acceleration of AI in business and life. 

SMRs, experts suggest, would provide localized power that reduces the strain on energy grids. The work NuScale is doing has the potential to be a win/win situation for the company and society at large.  

However, even with backing from Flour (FLR), a construction firm with a similar market cap, despite $15.6 billion in revenue, the pathway to profitability is years away. 

In Q1 2025, it lost $2.63 from its operations for every dollar in sales. Its losses will multiply exponentially as revenues rise. It won’t be easy to remain a going concern.    

There is no question that a long-term bet on NuScale stock is anything but a sure thing. 

That doesn’t mean the strangle revealed in yesterday’s unusual options activity isn’t a good bet. 

The NuScale Strangle 

As I said in the introduction, the June 20 $18 put and $25 call form the basis of the strangle bet. For those new to options, a strangle is when you expect a stock’s volatility to increase up or down. The strangle involves simultaneously buying a call and a put with different strike prices and the same expiration date. 

With the long strangle, you want the call strike price to be higher than the current share price, while the put strike price is lower than the current share price. In other words, both options are OTM (out of the money).

The good thing about the long strangle is that your maximum loss is capped at the cost to buy both options. In contrast, the maximum profit is unlimited because the share price could move significantly higher than the $25 call strike price or go to zero, well below the $18 put strike price. 

The net debit (cost of the two options) is $2.41 or a reasonable 10.42% of yesterday’s $23.12 closing price. The breakeven on the upside is $27.41 [$2.41 net debit + $25 call strike price] while the downside breakeven is $15.59 [$18 put strike price - $2.41 net debit].

The probability of its share price being above or below the break-even is 33.3%. The $23 put expiring on the same day has a 41.3% profit probability, but the net debit for the long strangle for the $25 call / $23 put combo is 18.08% of its share price, 73% higher than the $18 put. 

I liken the long strangle to the “show” bet at the race track. The payoff will not necessarily be significant, but the $241 bet won't hurt the pocketbook of someone who can afford to bet on options. 

It’s an easy play considering that its share price has moved 18.6% higher (upside breakeven) and 32.6% lower over 36 days on several occasions over the past year. 

Conservative investors ought to like this options bet on NuScale.