Chesapeake Energy (CHK) Stock Could Continue Higher

Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) is making its way for the top at mid-day Thursday, with gains of nearly 7%. However, with no news issued by the company, many are asking why.

It seems as though recent geopolitical unrest is leading to gains in the value of oil. Of course, since CHK is an oil and natural gas company, any increase in the value of oil directly relates to the company’s ability to generate revenue. Here’s what’s happening:

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CHK Stock Heads Up On Geopolitical Unrest

Often times, the driving force behind moves in the value of Chesapeake Energy stock has to do with the price of oil. Taking that a step further, oil tends to see changes when geopolitical unrest hits areas of high production around the world.

That’s exactly what seems to be propping oil up today, and therefore the value of CHK shares.

One of the biggest geopolitical stories hitting the tape today has to do with Iran shooting down a United States drone. The drone was operating in international airspace when it was shot down by Iran’s Revolutionary Guard.

According to the country’s Revolutionary Guard, the drone was said to be an “Intruding American spy drone.”

Unfortunately, this news is likely to break diplomatic relations between the United States and Iran down to new levels. In the past, the United States has imposed sanctions, and since those sanctions have been lifted, they have been threatened several times. As such, many believe that the US will impose sanctions on Iran in response to the news, leading to a loss of oil from one of the world’s largest producers in the market. Suggesting that gains in oil are coming soon.

Moreover, an oil tanker was recently attacked in the Middle East. In fact, as a result of the attack, the United States is sending 1,000 personel to the region. This leads to more uncertainty in the supply of oil, further propping up its price.

As mentioned above, CHK stock is heavily correlated to the values of the commodities that it produces. With so much uncertainty surrounding the supply of oil the commodity is climbing, giving the company the opportunity to earn more money through production. So, there you have the underlying reason for today’s gains.

Options Traders Are Expecting Gains

As mentioned in a previous post, options traders seem to have predicted the gains that we’d see today. On June 18, 2019, the $2.50 call options for June 28, 2019 were going wild. This suggested that the market saw a big run in value coming.

Should the market be correct, the gains that we’re seeing today are a drop in the bucket compared to what may be coming ahead. So, CHK is a stock that’s well worth watching.

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What Do You Think?

Where do you think CHK is headed? Join the discussion in the comments below!

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