Chesapeake Energy Corporation (CHK) Sits Out the Rally

Chesapeake Energy Corporation (NYSE:CHK) is sitting out the rally

Josh Selway
Jun 10, 2015 at 2:11 PM
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Susquehanna lowered its expectations for several energy names today, and for Chesapeake Energy Corporation (NYSE:CHK), this meant a price-target cut to $15 from $18. As the broader market rallies, CHK is taking the (red) road less traveled, down 0.6% at $13.15.

Since touching a 2015 high of $21.49 on Feb. 3, CHK has fallen nearly 39%. More recently, the shares have faced overhead pressure in the form of their descending 10-day moving average, and are now trading south of $14 -- an area that's contained the stock's pullbacks since late 2008. In fact, CHK just touched a three-year low of $12.89 on Friday.

Against this backdrop, traders haven't had to think twice to bet against the stock. For one, CHK's Schaeffer's put/call open interest ratio (SOIR) of 1.46 ranks in the 84th annual percentile, meaning short-term option traders are more put-skewed than normal. Also, short interest accounts for over 21% of CHK's float, which would take more than eight sessions to buy back, at normal trading volumes.

Likewise, today's note from Susquehanna is par for the course for Chesapeake Energy Corporation (NYSE:CHK). Just four out of 20 analysts offer up a "buy" or better opinion.


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