Skeptics Bite as Chesapeake Energy Corporation (CHK) Gaps Lower

An earnings miss is taking a toll on Chesapeake Energy Corporation (CHK)


Published on Feb 25, 2015 at 11:37 AM
Updated on Apr 20, 2015 at 5:32 PM

Chesapeake Energy Corporation (NYSE:CHK) is getting crushed in the wake of an earnings miss. At last check, the shares were down 11.5% at $17.59 -- and on the short-sale restricted list. Meanwhile, intraday options volume has swelled to six times the norm.

CHK's most active option is the weekly 2/27 18-strike call. However, these positions don't appear to be bullish in nature, with all signs pointing to sell-to-open activity. In other words, the call writers expect the energy stock will remain below $18 through Friday's close, when the weekly series expires.

In recent weeks, CHK call selling has been popular at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the last 10 days across those exchanges, more than 7,400 contracts have been sold to open, compared to roughly 6,200 bought to open.

Meanwhile, more conventional skeptics have been buying to open CHK puts. The security's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.16 outstrips 76% of comparable readings from the past 52 weeks.

Turning to the charts, it's been a rough year for Chesapeake Energy Corporation (NYSE:CHK). Specifically, over the last 12 months, the stock has tumbled 27.4%.

Daily Chart of CHK since February 2014

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