This morning US equity futures are unchanged after Asian markets closed in the red and European stock indices are down as well. The key events this week will be US presidential elections, a leadership change in China, and an vote on further austerity measures in the Greek parliament. Current polls suggest Obama will be the most likely winner Tuesday night, though it is far from a sure thing. European credit market have started the week trading with a risk off tone ahead of these key events, with the German 2-yr yield dipping into negative territory this morning. The dollar is stronger against the Euro as well, though gold, silver, and crude oil are little changed.

On Friday Chesapeake Energy Corporation’s stock fell 7.9% after the company admitted its debt reduction targets for 2012 may be pushed into 2013, along with some deal closings. This drove unusually high put trading volume in the stock on Friday. The biggest trade of the day was the purchase of 7,000 Nov. 19 puts for $0.67 and the sale of 7,000 Dec. 17 puts for $0.40. By buying a short dated put this trader expects the stock to continue its slide into November expiration next week. However, by selling a December put this trader has picked a level he is willing to buy the stock at, showing that he is bullish in the long term despite expecting short term weakness.

The bearish case for this stock revolves around Chesapeake’s increasing debt and list of unfulfilled promises to investors. Currently the company has about $16 billion in long term debt, which is up from $11 billion last quarter. On Thursday Chesapeake reported a net loss of $2.1 billion after having to write down the value of some assets due to depressed natural gas prices. The company had previously announced it would reduce its debt to no more than $9.5 billion by Dec. 31st, 2012, but recently announced this was more likely to be accomplished in early 2013. To achieve its debt reduction goals, the company planned to sell up to $14 billion in assets this year, but has seen consistently failed to close the deals on the timeline they gave investors.

The longer term bullish case for the stock is that the company will rebound quickly if natural gas prices continue to come off their recent lows. The company’s profits are highly correlated with natural gas prices, and an increase in energy prices will not only increase revenue and EPS, but also allow them sell their oil and gas fields at higher prices. If the company begins to deliver on its debt reduction promises and closes some deals in early 2013, the stock is likely to be gain interest from value investors seeking to profit from rising energy prices. Chesapeake is already on some high profile investor’s radar; Carl Icahn owns over 50 million shares and Mason Hawkins, whose company Southeastern Asset Management, owns 13.9% of Chesapeake and has said he believes the company is 70% undervalued.