Chesapeake Energy Corporation (CHK) Traders Grow Increasingly Bearish

Bearish betting has been gaining in popularity on Chesapeake Energy Corporation

by Karee Venema

Published on Nov 25, 2014 at 12:13 PM
Updated on Apr 20, 2015 at 5:32 PM

Chesapeake Energy Corporation (NYSE:CHK) puts are crossing the tape at a rate nearly four times what's typically seen at this point in the day, and are outpacing calls by roughly 3-to-1 margin. The stock's short-term contracts are in high demand, too, as evidenced by the equity's 30-day at-the-money implied volatility (IV), which has jumped 7.4% to 36.4% -- in the 83rd percentile of its annual range.

Most active by a mile is CHK's weekly 11/28 23.50-strike put, where 12,135 contracts have changed hands. (As a point of comparison, the next most active option has fewer than 950 contracts on the tape.) The majority of the positions at this near-the-money put have gone off at the ask price, IV has surged 11.1 percentage points, and volume outstrips open interest, making it safe to assume new positions are being initiated.

Although analysts have recently expressed optimism toward CHK, today's bearish positioning among option traders isn't too surprising, considering the equity has shed almost 21% since hitting a two-year peak of $29.92 in early July to trade at $23.73. What's more, it echoes the withstanding trend seen at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, Chesapeake Energy Corporation's (NYSE:CHK) 10-day put/call volume ratio of 1.15 across this trio of exchanges ranks in the 88th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

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