Chesapeake Energy Called the Market's Bluff

To say that trading energy stocks has been difficult in recent months is a major understatement. When you see that even an industry giant like Chesapeake Energy Corp. (CHK) lost money in its hedging activities, you know that trading activity during the last quarter was extremely wild.

At Friday’s closing price of $48.40, Chesapeake Energy shares are down 35% from their 12-month high of $74. But the cause is clear.