Volume is what drives the entire market, and that is a fact that often gets lost in the sea of indicators, patterns, and trend lines that dominate today’s concept of analysis. However, most investors fail to realize that these indicators and patterns are nothing more than price action recognition, and what drives price action is volume.

So, at the end of the day, those who understand volume understand where and when a stock or exchange-traded fund (ETF) might start to move. Today, it isn’t just any regular volume that stands out; it is call option volume, which is important due to its implications for the underlying stocks. Call options only pay off if a stock moves to a certain price by a certain date. Higher stakes mean higher conviction levels.

This is why investors can expect high conviction in upswings for stocks like Cameco Co. (NYSE: CCJ) in the basic materials sector as a uranium play or healthcare sector discounted giant Pfizer Inc. (NYSE: PFE) and even a broader ETF covering the regional banks through the SPDR S&P Regional Banking ETF (NYSEARCA: KRE). There are plenty of reasons to justify the rising volume in these bullish bets; here are some of them,

Cameco: Technology Trends Need Uranium to Work

There is a reason why the biggest names in the technology sector, Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), and other giants, are now betting on nuclear energy. Today’s energy grid just won’t be able to withstand the demand from new computing developments.

Artificial intelligence is one theme that carries its own set of energy demands. However, it is still limited in comparison to what’s next, which is quantum computing. Nuclear energy seems to be the most viable solution as these technologies become more developed and adopted in the global economy.

This is why call option traders have run into Cameco stock in recent weeks, netting a volume of up to 384,705 total call options traded in the stock. More than that, Wall Street analysts now see a consensus price target on Cameco of up to $66.6 a share to call for a net upside of 30% from where the stock trades today.

These trends also explain the 9.3% collapse in short interest for the company over the past month, a clear sign of bearish capitulation in the run-up to these bullish themes for the entire industry.

Pfizer Stock’s Discount Won’t Last Long

By trading at a significant discount to its 2022 highs, Pfizer stock now offers investors a rare opportunity to buy this industry giant at a discount. Besides the price action, discounts are coming through the company’s valuation multiples, such as the price-to-book (P/B) of 1.7x compared to the medical sector’s average of 4.8x today.

As of December 2024, traders bought up to 201,090 call options, which was unusual compared to the usual volume of 157,196 for Pfizer stock. This action confirms that the stock is not only cheap but that a catalyst might be underway in the near future to deliver these higher prices.

To build on top of these bullish trends, analysts at Guggenheim have kept their buy rating on Pfizer stock as of December 2024, this time placing a $33 price target on it as well. This valuation would imply a net upside of 25% from where it sits today.

In addition to these trends, investors can notice the 5.5% decline in Pfizer stock’s short interest over the past month, perhaps as bearish traders see the same catalyst and upside that these call option buyers have noticed to justify their unusual volume purchases.

Regional Banks Set to Soar on Rate Cuts?

There are reasons to believe that bonds will rally in the coming months, especially as the Federal Reserve (the Fed) is starting to cut rates and looking to keep doing so into 2025. These lower rates help assets like regional banks see a spike in earnings due to business activity.

Through products like mortgages, credit cards, and auto loans, these regional banks could see better earnings per share (EPS) in the coming months, which could easily translate into higher valuations for most of these stocks as well.

On top of the upside that these call option buyers see in regional banks, the SPDR S&P Regional Banking ETF offers a $1.47 payout per share to translate into a 2.42% dividend yield today.