Chesapeake Energy Corp (CHK)

[dwms07]

Whale1, here's why CHK trades on oil!

Chesapeake has great volatility, 50 million in average daily volume, and a low price under $10! It does not make any different whether Chesapeake was into computer parts, apples, snake oil, or energy! The volatility, volume, and low price make it a fantastic daytrade stock regardless of the nature of its business!

If a large group of daytraders started trading Chesapeake on the price of diamonds; the stock would trade on the price diamonds. This is true not because Chesapeake is in the diamond business; it is true simply because that is the way this large group of daytraders trade this fantastic daytrading stock!

In other words, the way it trades is established by the daytraders, not by the business model of the stock.

The problem is that Chesapeake makes 83% of its income from natgas; 17% from oil. The other problem is that management are experts in gas extraction! This makes a problem for a trader who wants to bet on natgas and on management. Oil is an International market governed mostly by the desires of the Saudis. Natgas is a local market governed within US borders.

Natgas can move up 4% and Chesapeake stock ignores the move. That sucks! On the other hand, if natgas prices drop 4%, Chesapeake takes a heavy hit.

The stock would be a much more attractive to long term investors if it traded mainly on the price of natgas.

The only way this is gonna happen is if the share price moves up to $15 and the company does a 2 for 1 reverse split running the price on up to $30 per share. Then CHK would be too expensive for small daytraders and become a much better natgas buy simply because it would then trade in the commodity that everyone wants it to trade in.

I wrote Chesapeake's Chairman and CEO and told them but they likely did not even read my email. I'm thinking about writing the Chairman of Southwest. They own 10% of the stock and might just listen. All they got to do is reverse slit the stock. Volume then drops and price increases and turns CHK into a stock thats tracts natgas.