27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
A huge spike in the Chesapeake Energy Corporation (NYSE: CHK) insurance on senior 5-year bond default cost index this week indicates that investors are growing increasingly pessimistic about the company’s ability to avoid default. Shares of the company’s common stock fell 33 percent to open the week after reports surfaced that the company is now working with restructuring attorneys Kirkland & Ellis.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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A mid-day press release from Chesapeake assured investors that the company has been working with the firm since 2010, but the reassurance did little to calm market fears. The spike in the 5-year bond default index is the largest since Chesapeake asked bond holders to accept longer-dated debt instruments back in early December.
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“The CHK senior unsecured paper was down 7 to 14 points,” Marty Fridson, CIO at Lehmann Livian Fridson Advisors LLC, tells Benzinga. “The second lien bond fell ¼ point to 40. With the other paper largely in the teens, the market is putting a very high likelihood on default.”
Fridson also noted that Chesapeake wasn’t the only company that witnessed a spike in default fears this week. He adds that WPX Energy Inc (NYSE: WPX), Oasis Petroleum Inc. (NYSE: OAS), Halcon Resources Corp (NYSE: HK) and Denbury Resources Inc. (NYSE: DNR) bonds are among the hardest hit so far this week.
Disclosure: the author holds no position in the stocks mentioned.