Stock up 43% since March 2
Shares of Chesapeake Energy (NYSE: CHK) have rallied more than 43% since reaching a 52-week low of $13.50 on March 2, but at least one bullish investor could be betting that the stock could hold at this level during the next few months.
Looking at the Oct. 17.5 puts, an investor sold 10,000 contracts for around $1.30 right out of the gate yesterday, despite the fact that the company did not announce significant news the day before. SunTrust Banks, however, recommended investors buy shares of CHK because they have a price target of $25. These puts closed unchanged on the day at $1.40 per contract and were home to open interest of 1,943 contracts.
CHK shares dropped 16 cents yesterday to $19.67. This investor needs CHK shares to expire higher than $16.20 to make money.
Bullish options activity such as this does not mean investors should run out and buy up shares of CHK. It's interesting to note that this investor does not need CHK shares to rally - the investor simply does not want the stock to drop drastically. Bullish investors who agree could also be calling a downside limit in sight for CHK shares on a bet that the stock has more room to rally.
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