Options Trades: Bad Omen for Oil & Gas Co.?
Chesapeake Energy is seeing heavy options activity Thursday, as rising oil supplies weigh heavily on the energy sector.
CHK stock has been trading between $14 and $19 for the last two months, but today's options action indicates that we could see it fall below that range in the short term. More than 21,000 puts have changed hands in the first two hours of the session, compared with normal turnover of 14,800 puts in the last 30 days.
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That includes 11,400 puts traded at the February 10 strike, against an open interest of 3,310 contracts, according to OptionMonster's proprietary tracking systems. February 12.50 puts have likewise traded actively but are far below open interest of 15,100 at that strike. Traders are also buying up the April 5 puts, at triple open interest.
Chesapeake is down more than 7 percent in midday trading to about $14. The company's next scheduled event is its quarterly report on Feb. 17, after the market closes.
I own puts in CHK.
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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.