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Chesapeake Energy attracts bulls

Pete Najarian (ask-pete@optionmonster.com)

Chesapeake Energy has been ramping higher, and yesterday traders were betting on more upside.

optionMONSTER's Heat Seeker system found bullish trades in the November Weekly 28.50 calls that expire two weeks from today. More than 5,500 of the contracts changed hands, including a single print of 4,494 that was purchased for the ask price of $0.76. The volume was far above the previous open interest of just 225, showing that this is fresh buying.

These long calls lock in the price where the stock can be purchased, letting investors cheaply position for a rally and enjoy potentially significant leverage if one occurs. (See our Education section for more on how to manage trades more effectively with options.)

CHK rose 3.96 percent to $28.37 yesterday and is up 72 percent so far this year. The company is involved in the acquisition, exploration, development, and production of natural gas and oil.

Energy has been a standout theme for months in option trading, so it's not a huge surprise to see this name light up our scanners. Citi upgraded Chesapeake to a "buy" from "neutral" yesterday and raised its price target to $35 from $27.

Total option volume was twice its daily average for the last month. Some 33,600 calls traded versus about 18,600 puts, reflecting the session's bullish tone.

Disclosure: I own CHK calls.

(A version of this post appeared on InsideOptions Pro yesterday.)

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