Today I ended a position in CHK that I took on Wednesday for a fraction of a percent gain. I feel fortunate that I was able to execute a the price I did, because the price of CHK fell nearly 5% during the remainder of the day.
My intention in opening this position was to increase exposure to natural gas prices – traditionally CHK has been a very reliable way of doing this, and given their recent corporate issues it seems reasonable that increased gas prices would do their price a world of good.
Unfortunately they simply have too much unpredictable volatility, counter to increasing futures prices throughout the day their stock price fell. I have yet to fully determine why this was, but I suspect there may have somewhere been news of further instability.
The lesson here is that no security will ever fully match exposure to natural gas futures like a pure play in natural gas futures.