CHK/Pat – I think LNG exports will double next year and keep up demand and, eventually, CHK should benefit.
As a new play, I'd go with:
- Sell 10 CHK 2021 $3.50 puts for $1.40 ($1,400)
- Buy 30 CHK 2021 $2 calls for $1.25 ($3,750)
- Sell 30 CHK 2021 $4 calls for 0.65 ($1,950)
That's net $400 on the $6,000 spread so upside potential of $5,400 (+1,350%) at $4 and worst case is you own 1,000 shares at net $3.90 ($3,900) so good risk/reward ratio.
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