May 25th it was announced that Carl Icahn is making some noise by changing management over at Chesapeake Energy. He owns 7.6% of CHK, and one thing that Icahn is known for, going in and changing and improving things so the company can continue to prosper.
I did a option trade on CHK today and want to share my thoughts and trade.
CHK is one of those stocks that I would love to own, as long as I take some premium with me before I count on the stock moving in my direction. My favorite way to buy stock is to sell puts. This way if I get put the stock I have some premium built into the position. And if I don’t get put the stock I will get to keep the premium. Its a win for me as long as the stock stays above my break-even point. If I do get put stock I will turn around and sell calls against my position, classic covered call strategy. Below I have the risk graph of my trade.
I sold the 14 strike for $1.00 10 times. If CHK stays above my strike price I will get to keep the $1.00 and if CHK trades below 14 at expo and I am put the stock then my cost basis is $13. I’ll keep you posted on any changes.