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November 4, 2009 7:57 EST Related Symbols: CHK
you're watching:
Mad About Options
An options-related take on Jim Cramer's latest recommendations and analysis on the latest securities and ETFs getting attention on the Street.
Everyone’s crazy about natural gas, Cramer said. How did the bulls and bears fare?
Mad About Options takes a look at the stocks getting coverage from Jim Cramer, Fast Money casts and other heavy hitters in the financial press and reviews strategies option traders might have used if they agree or disagree with these assessments of the underlying stocks.
The Pick –Chesapeake Energy (CHK)
On the August 6 edition of Mad Money, Jim Cramer said “Everybody is crazy about natural gas … Chesapeake Energy is definitely a buy.” Well, CHK shares are now trading at 24.31, down from 24.75 at the time of that report. So how did the bulls and the bears do?
Bullish Option Traders on CHK:
Investors who followed Cramer’s lead sold the January 25 straddle for $6.40 and bought the January 30 calls for $1.30, collecting $5.10 for the strategy. This spread is now marked at $4.10, so it’s a winner by $1.00 with the stock down 44 cents.
Bearish Option Traders on CHK:
On the bearish side of things, investors were buying the October 30 puts for $5.80 and selling the October 25 puts for $2.20, paying $3.60 for the bear put spread. This spread expired at $1.33, with the stock at $28.67. That’s a loss of $2.27 versus a 44-cent drop in the shares.
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