Chesapeake Energy Corporation (CHK) Challenges Chart Resistance Post-OPEC

Chesapeake Energy Corporation (CHK) stock is moving higher, and weekly call options are increasingly popular

Dec 1, 2016 at 1:35 PM
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As the oil rally continues after yesterday's production cut by the Organization of the Petroleum Exporting Countries (OPEC), Chesapeake Energy Corporation (NYSE:CHK) is continuing its move upwards. For the day, CHK has managed to tack on 2.9% to trade at $7.20, bringing its year-to-date gain to 60%. CHK shares recently broke back above their 80-day moving average, which has been a crucial -- albeit not totally reliable -- source of support on several occasions so far in 2016.

CHK 161201

Meanwhile, call options have been unusually popular on the energy stock, suggesting there's a fair few bulls in the option pits that want to see CHK's upside continue. In fact, data collected by Schaeffer's Senior Quantitative Analyst Rocky White shows 101,571 weekly CHK calls traded in the past 10 days, nearly doubling the 55,188 weekly put options that crossed the tape in this time frame.

So far today, CHK call volume is accelerated again, with roughly 65,000 contracts traded -- representing three times the intraday norm, and easily outstripping the 14,000 puts exchanged so far. Weekly call options remain a popular choice, with the weekly 12/9 8-strike call emerging as the most active strike; upwards of 15,500 contracts have traded here so far.

However, that closely watched $8 level could pose a stumbling block to CHK's OPEC-related rally. The stock's high close for the year stands at $8.05, so a rally up to this area could trigger some selling activity. In fact, looking just 1 point south, CHK has struggled to close a month above $7, with its Nov. 30 close squarely at this level representing its first such success after repeated challenges of this level throughout the year. And the 7 strike is home to more than 30,000 call options among weekly and monthly series with December expiration dates, which raises the prospect of options-related resistance coming into play for Chesapeake Energy Corporation (NYSE:CHK) during the short term.

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