Soaring Chesapeake Energy Corporation (CHK) Sees a Rare Surge of Call Volume

Chesapeake Energy Corporation (NYSE:CHK) is trading 20% higher today, and calls are in high demand

Mar 2, 2016 at 2:06 PM
facebook X logo linkedin

Chesapeake Energy Corporation (NYSE:CHK) has jumped 19.9% today to $3.31, as the stock reacts to news ex-CEO Aubrey McClendon* was indicted** by the Department of Justice (DOJ) on antitrust charges -- and stabilizing crude futures. Against this backdrop, calls are crossing the tape at an accelerated clip, marking a change of pace in CHK's options pits.

*Update: Earlier today, McClendon died in a car crash at the age of 56. According to the Oklahoma City Police Department, he crashed while driving "at a high rate of speed."

**An earlier version of this article incorrectly stated McClendon was found guilty. He was, in fact, indicted by a federal grand jury.

Specifically, calls are changing hands at 1.6 times what's typically seen at this point in the day, and are outpacing puts by a more than 2-to-1 margin. New positions are being initiated at CHK's weekly 3/11 3-strike call -- which expires at next Friday's close -- though it's unclear as to whether these options are being bought or sold.

Widening the sentiment scope reveals put buyers have dominated CHK's options arena. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 2.25 sits in the 95th annual percentile.

Echoing this put-heavy backdrop is CHK's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 3.35. What this means is that near-the-money put open interest more than triples call open interest among options in the March-dated series.

This skepticism is seen elsewhere on the Street, as well. Short interest jumped 4.4% in the most recent reporting period, and now accounts for more than two-fifths of CHK's available float. Plus, all but one of the 18 covering analysts maintain a "hold" or worse suggestion.

This pessimism isn't too surprising, given Chesapeake Energy Corporation's (NYSE:CHK) long-term technical troubles. Year-over-year, the shares are off 80%, and tagged a record low of $1.50 on Feb. 8. However, thanks to today's surge, CHK is on pace to notch its first close north of its 40-day moving average since last October.


Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI