Chesapeake Energy Rally Catalyzes Call Buying

Chesapeake Energy Corp. (CHK) did not announce any news today, but buying action in a later-dated call series is boosting options volume in the oil and gas producer.

We saw at least one investor took a bullish stance on the company, and bought a hefty number of July 30 calls at a premium of roughly $1.90 per contract. That means investors who bought these calls are looking for the stock to climb to $31.90 (a 20% rally from the current level) by July expiration. Keep in mind, however, that investors could choose to sell these calls if the stock gains significantly before the options expire.

The out-of-the-money July 30 calls have crossed the tape more than 4,500 times today versus open interest of just 891 contracts, indicating investors bought these options to open. The calls have gained 12 cents on the day, and have an implied volatility of 40.

CHK shares are currently trading up 50 cents, or 2%, to $26.58. The stock is roughly 12% off its 52-week high (CHK shares breached the $30-mark in October).

CHK has not announced an earnings release date, but the market expects the quarterly figures sometime around Feb. 16. It’s interesting that the call buying action we saw today suggests investors are looking for even more movement in the stock long after the company’s next earnings report.