Someone CHK the Gas
There are finally some decent earnings to cheer about today. Both GS and NFLX are up big on beating estimates. For stocks that are at near all-time highs, great earnings are necessary to propel us higher. Oil and Gas are doing better than ok this year to help Technology keep things moving. The Energy group has been the big winner in 2016 with outstanding performance after a dismal start. Energy lead by CHK has turned in the best relative performance so far this year (AlphaVision®Landscape group on the lower left) in the S&P 500.
CHK is a story from a famous ex-CEO to over production just in time for the crash in Nat Gas prices. The $40 company is now a $6 company. At some point they will be an asset play for someone with a very long view. The Trend Reversal Landscape is showing a lot of red lately in the Energy group. The poor 5 day relative performance is probably the group taking a pause after the big move to $50 in oil. CHK clearly is not resting since 3 month performance (tallest building) is the best in the group and it is still rallying short term (green color).
On top of the recent performance there is a lot of call buying activity in CHK. The near term volatility is bid sky high with the terms expiring prior to earnings. Long ratio call spreads could work in here in the short term (buying 2 and selling 1). Maybe the long winter for Nat Gas is over if the producers keep picking up a bid.
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