Savvy options bulls force Chesapeake higher with call spread

Today’s tickers: : CHK, EXPD, BAC, C, AAPL, CYPB & SQNM CHK – Chesapeake Energy Corp. – Oil and natural gas exploration and production company, Chesapeake Energy Corporation, edged onto our market scanners this afternoon due to a surprising volume of call activity. It appears that one bullish investor used its share price weakness to buy 1700 contracts at the July 20 strike at a price of 1.70 while selling the same amount at the July 25 strike bringing in 0.81 per contract. Shares have since rallied and stand 0.5% higher on the day at $15.49 despite a continued slide in crude oil prices. This bullish call spread costs a net premium of 89 cents and so breaks even at that distance above the lower of the two strikes at 20.89, yielding a maximum profit of 4.11 per contract if CHK can climb from today’s price to $25.00 or above. With any luck for this investor, Chesapeake’s share price will heat up come July, as currently it has not been above $25 since early in November of 2008. EXPD – Expeditors Intl. – Shares of global logistics provider, Expeditors Intl. may indeed be falling but one option trader seems to think he has a way of profiting from the current decline. At $28.19 and down 2.5% on the session, shares are still above the October low point at $24.05. Today an investor appears to have added a bullish twist to a sold strangle on the haulage company using options in the May contract. One suspects the investor hopes that the deluge of negative news may be out of the way and the stimulus package in action by the time these options expire. The investor seems to have sold puts below the recent low at the 20 strike and sold calls at the 35 strike 12,000 lots each. In addition the investor bought 8,000 calls at the 30 strike for a 3.44 premium. The trade is an interesting one and requires that the market doesn’t break lower – in the raw strangle the breakeven occurs at $17.25 given the total 2.75 proceeds from the sale of calls and puts. Should its shares recover, which is a real risk should the market ever get over its January shivers, the investor is exposed to a rally in stocks at the heart of distribution, so the call purchase here makes sense. BAC – Bank of America. – Will…