Energy Stocks Fall Victim to China's Currency Shake-Up

Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Seadrill Ltd (NYSE:SDRL) are seeing red, following China's currency decision

by Alex Eppstein

Published on Aug 11, 2015 at 3:33 PM
Updated on Jun 24, 2020 at 10:16 AM

As we noted earlier, U.S.-listed Chinese stocks are getting clobbered in the wake of the People's Bank of China decision to devalue the yuan -- but they're hardly the only ones. One sector that's bearing the brunt of the news is energy, where a number of notable names are tanking -- exacerbated by OPEC's non-member production forecast. Here's a quick look at three such stocks: Chesapeake Energy Corporation (NYSE:CHK), Exxon Mobil Corporation (NYSE:XOM), and Seadrill Ltd (NYSE:SDRL).

CHK has plunged 4.8% to trade at $8.22, and has surrendered nearly 58% year-to-date. A few days ago, the shares bounced from a 12-year low of $6.85, but ran out of gas near their descending 20-day moving average. Traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been upping the bearish ante of late. Specifically, Chesapeake Energy Corporation's 10-day put/call volume ratio across this trio of exchanges is 2.84 -- just 3 percentage points from a 12-month peak. Along similar lines, almost 30% of the equity's float is sold short, equivalent to 9.3 times CHK's average daily trading levels.

XOM is faring slightly better -- down "only" 0.9% at $77.33 -- but it also touched a three-year low of $76.33 around midday. The brokerage bunch has mostly abandoned hope for the chronic underperformer, with 11 of 14 analysts doling out "hold" or worse suggestions. Similar skepticism has been witnessed among traders at the ISE, CBOE, and PHLX in recent months. Exxon Mobil Corporation's 50-day put/call volume ratio of 1.70 ranks in the 72nd percentile of its 52-week range.

Finally, SDRL has dropped 2.8% at $8.56, bringing its 2015 deficit to 28.3%. Also, recent rally attempts have stalled at the stock's 20- and 30-day moving averages. Meanwhile, short-term option traders have been put-focused. Seadrill Ltd's Schaeffer's put/call open interest ratio (SOIR) of 1.55 indicates put open interest outweighs call open interest among options in the front three-months' series. What's more, this SOIR registers near the top quartile of its annual range.


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