Chesapeake Energy Corporation (CHK) Calls Run Hot as Stock Sizzles

Carl Icahn wiped his hands of Chesapeake Energy Corporation (CHK)

Nov 15, 2016 at 1:44 PM
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The latest round of regulatory filings has prompted some sharp moves on a number of big-name stocks. Chesapeake Energy Corporation (NYSE:CHK) is no exception, and the technical outperformer is surging even though Carl Icahn dissolved his stake in the oil-and-gas firm. At the same time, options traders are targeting the stock, with some taking aim at additional upside.

As alluded to, CHK shares are red-hot today, up nearly 11% at $6.06. This is more of the same from an energy stock that's approaching a 35% year-to-date gain, helped by a recent post-earnings rally. Also, the equity is attempting to muscle back atop its 80-day moving average -- something it's been unable to do all month.

Options speculators are showing confidence, though. CHK calls are crossing at 1.7 times the usual intraday rate, and the November 6 strike is likely seeing some buy-to-open activity. For those purchasing these near-the-money contracts, the goal is for the stock to extend its lead above the $6 level through Friday's close, when the front-month series expires.

When it comes to short-term traders, calls have been the options of choice. CHK sports a Schaeffer's put/call open interest ratio (SOIR) of 0.91, registering in the low 14th percentile of its annual range. And for those placing near-term bets, premium currently looks relatively inexpensive, from a volatility point of view. The stock's Schaeffer's Volatility Index (SVI) of 78% is perched above just 9% of readings taken in the past year.

That said, not everyone on the Street is sold on Chesapeake Energy Corporation (NYSE:CHK). For one, 80% of analysts rate the stock a "hold" or a "strong sell." For another, short interest exploded 31.4% during the two most recent reporting periods, and now accounts for 19% of CHK's total float.

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