If I look into the rules for denied boarding (bolding mine):
If you have presented yourself on time for check-in with a valid flight reservation and travel documentation and you're denied boarding by the airline due to overbooking or for operational reasons, and you don't voluntarily give up your seat, you are entitled to...
The question remains: is your ticket valid or not. Should an airline invalidate your ticket, then the denied boarding does not fall under EU/UK261. You are then in a position to argue against the airline on the validity. I would certainly not buy a really expensive ticket and sue them expecting all will be OK.