by Ian Harvey
August 17, 2019
Chesapeake Energy Corporation (NYSE:CHK) rallied higher yesterday boosted by the spike in oil prices after the weekend attack on Saudi Aramco's Abqaiq oil processing plant.
The SPDR Energy Select Sector ETF (XLE), surged 4.2%, with all 28 equity components trading higher ahead of the open; with Chesapeake Energy near the +22% mark pre-market, to finally settle at 15.73% at close.
And, “Earnings Predictions” Members make 100% profit with an Option Call!
A NICE POTENTIAL PROFIT TO START THE WEEK!
Chesapeake Energy Corporation (NYSE:CHK) rally is the result of a drone attack on a Saudi Arabian oil refinery, sending CHK stock up more than +22% pre-market.
And this could be just the start of a prolonged battle, while the loss of 5% of the global production of oil is a big hit, which could expand should tensions continue to rise.
Chesapeake Energy, which is headquartered in Oklahoma City, currently operates in its home state, Louisiana, Texas, Pennsylvania and Wyoming. Chesapeake claims to have proven reserves amounting to 1.448 Billion of Barrels of Oil Equivalent (bboe). Around 190 Million Barrels of Oil Equivalent (mmboe) are currently in production.
The Drone Attacks…..
Ten automated, aerial, combat drones launched an attack on Saudi Aramco’s Abqaiq plant in Buqyaq and the Khurais oil field on Saturday.
The Saudi Arabian oil facilities account for nearly 10 million barrels of crude-oil production. The attacks resulted in massive plumes of black smoke emanating from the oil field, and a shutdown that could lead to about 50% of its production being at least temporarily thrown offline.
The oil facility that was attacked is responsible for production and processing of more than 5 million barrels of oil per day. That equates to about 5% of the global production on a daily basis.
With the attack in mind, it’s going to take quite a bit of time before this facility comes back online, starving global supply of 5% of the oil that it did have.
The Expected Results On Prices…..
S&P Global Platts estimated that Brent oil, the international benchmark, could see a $5 or $10 price surge from its current levels.
“While some commentators may call for triple-digit oil prices we would suggest that the sudden change in geopolitical risk warrants not only an elimination of the $5-10/Bbl discount on bearish sentiment, but adds a potential $5-10/Bbl premium to account for now-undeniably high Middle Eastern dangers to supply and the sudden elimination of spare capacity,” the Platts researchers wrote.
“As such prices are likely to break out of the current $55-65/Bbl options range, to test the high $70s as currently supported by fundamentals,” the researchers said.
Why the Initial Call Trade on Chesapeake Energy?
Instead of repeating the reasoning behind the trades, read the following transcript from “Earnings Predictions for the Week Beginning August 05, 2019” for full details.
Members of “Earnings Predictions” were advised to execute the following trades based on the expected earnings report…..
Option trade 1 to consider: Buy the CHK OCT 18 2019 2.000 CALL at approximately $0.13.
Option trade 2 to consider: Buy the CHK OCT 18 2019 1.500 PUT at approximately $0.18.
Shares of Chesapeake Energy fell 11% in a volatile session following its second-quarter financial report. The oil and gas producer said that revenue rose 4% from year-ago levels, but adjusted net losses widened by a third to $158 million.
At the time we managed to gain a potential profit of 94% due to this pullback.
Meanwhile, we have hung on to the call trade which has now provided a 100% return Monday.
YOU NEED TO BE IN TO PROFIT!
Do we expect to gain more from this trade?
What will “Stock Options Made Easy” advise members to do?
Is another trade to be considered?
What Can You Do?
Find out what we are recommending “Stock Options Made Easy" members to do – take profits, double-down, or execute a different trade?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!