by Houghton and Atkeson 11/05/08
Chesapeake Energy (CHK) has been in the news quite a bit lately.
On Oct. 30, it posted roughly in-line earnings. But, the reason why it received really big headlines was the CEO had purchased the stock on margin at substantially higher levels, only to receive a giant margin call in mid-October where he was required to sell virtually all of his shares at about $12 per share. He was worth billions of dollars and used to own 5.8% of the company's stock.
Today, CHK is trading at about $25 per share.
Option investors are buying about 150,000 calls on the belief the company may be acquired. Call buying is almost all in November expirations and concentrated in the Nov 27.50 (CHKKU) and 30 (CHKKF) Calls.
As we all know when buying and selling stocks, timing is everything.
Dawn Pennington
Read This Before You Buy Another Stock
A savvy stock position can start with a single options trade.
This technique can help you breathe a sigh of relief as it aims to relieve a 'choking' portfolio.
If you are familiar with buying calls and puts, we'll show you how to buy them even cheaper.
Anatomy of a Stock Option Ticker
Option tickers may look like a bowl of alphabet soup to you, but each letter means something.
You don't have to short stock to put a bearish bet on the table -- but the path to profits comes with different levels of risk.
