The price of oil and natural gas is once again on the move, prompted most recently by international tensions after Iran captured 15 British troops in the waters between Iran and Iraq.

Because we haven't yet found a completely viable alternative to fossil fuels, the demand for oil and natural gas remains incredibly high and supply tight. As a result, this is a great time to invest in energy exploration companies, and a great name is

Chesapeake Energy

(CHK) - Get Report

, which closed Thursday at $31.06.

Chesapeake Energy reported fourth-quarter net income on Feb. 22 of $445.5 million, or 96 cents per share, compared with $431.8 million, or $1.11 per share, a year earlier (outstanding shares rose year over year).

After declining for much of late 2006, Chesapeake Energy has been regaining ground along with the price of oil. The company recently broke above its 200-day moving average and should continue to rise. In addition, an important insider is placing bets on his company; that is always a good sign. CEO Aubrey McClendon purchased 200,000 shares at an average price of $30.62 on March 22 and 23, increasing his holdings to about 27.229 million shares, or about a 5.9% stake.

McClendon also holds options for about 500,000 shares; 50,000 shares of Chesapeake Energy's 5.0% convertible preferred stock (Series 2003), which is convertible into 304,810 shares; and 10,000 shares of Chesapeake Energy's 4.125% convertible preferred stock, which is convertible into 600,550 shares. Including the options and convertible shares, McClendon owns a little more than 28.634 million shares, or about a 6.24% stake.

The energy sector has performed particularly well for my deep-in-the-money call strategy, with both

Halliburton

(HAL) - Get Report

and

Peabody Energy

(BTU) - Get Report

reaching their strike prices for quick $1,000 gains. In order to continue capitalizing on the resurgence in energy prices, I will buy 10 contracts of the Chesapeake October 25s (CHKJE) in-the-money calls at a limit order of $6.90.

I am not alone in Chesapeake; other funds benefiting from this company include

Olstein All Cap Value Fund,

run by

Robert Olstein,

and The Cutler Fund

CALEX

, which has a three-year

return of 78%

.

Now let's get to the email.

Nails, I'm a huge fan of your articles and I'm glad you're writing every day. I believe you pick quality stocks with good catalysts, but I think they should be more volatile to reach the GTC (good till canceled) price before they expire. Even with my slight skepticism I still like the column; I'm enjoying the ride.

Thank you for your comments, as you bring up two points worth covering. First, although I like the fact that you enjoy my selections, I urge all my readers to do their own due diligence. Regardless of whether I present compelling reasons to enter into an investment, you should first learn about the company and where and why I believe it is prudent to purchase the options. Every investor must do his own due diligence in order to make money in the stock market.

Second, while more volatile stocks might reach the GTC quicker, they can also lose significant value more quickly. If a stock loses 20% of its value, it will take nearly a 30% gain to recover that loss. Stable companies provide the best opportunities for deep-in-the-money calls, as they provide the greatest downside protection, while still affording an excellent opportunity to increase in value by $1 at some point in a four- to six-month period.

First of all, thank you very much for your expertise. I am new to options and I want to get started trading. My question is two parts. First, when placing an order, do you use GTC so it will not get canceled after the market closes? Second, do you place the GTC to sell right after your order to buy is filled?

Thank you for your questions; both are important to clarify. In placing an order, I always use a GTC because it lasts beyond the close of the market. When I place an order, I do so for a reason, and if the market does not hit that price immediately, I still want that action to take place.

Once I purchase a deep-in-the-money call, I immediately place a GTC for $1 above my purchase price in the options. This is an essential aspect of my deep-in-the-money calls strategy; I believe in swinging for singles rather than for the fences.

During a four- to six-month period, stable companies will generally trade $1 higher than our entry points. However, in selling immediately for a $1 gain, I avoid the problem of the unrealized gain. Too many investors leave their gains on paper. In selling quickly for $1,000, we can see gains in our bank account and find new and better investments at cheaper entry prices.

One of the first things I do when looking up a stock quote is check the option chain. I have noticed that your deep-in-the-money calls are very close to the current stock price; in other words the sum of the option price and strike price are very close to the current stock price. I have also noticed on other stocks (not the ones you have suggested) where the option and strike price sum are higher than the current stock price. Can you comment?

When I look for attractive calls to purchase, I look for options with a low premium. The sum of the strike price and the option price less the stock price will equal the premium. That is exactly why my deep-in-the-money calls are very close to the current stock price. This allows us to control 1,000 shares of the stock without paying much of a premium at all.

A touching tribute to Vuk. I must confess that although I think ofmyself as being unprejudiced, the fact that I am surprised a former athlete with the nickname of "Nails" could write that, and also write knowledgably about the stock market, and demonstrate a knack for writing in general, tells me that I still have a ways to go.

Thank you for your kind comments. I have received great support from my readers on

TheStreet.com

in light of the untimely passing of my dear friend Vuk. Writing from the heart and learning about the stock market are things that many athletes can do in order to ensure future emotional and financial well-being.

In the "game of life," I have emphasized the need for athletes to better prepare for their post-playing days by ensuring financial stability. In establishing The Players Club, I hope to provide other athletes with the ability to learn and benefit from much of what has made my post-athletic career a success. Thanks again for your comments.

Always Remember: Life is a journey, enjoy the ride!

At the time of publication, Dykstra had no positions in stocks mentioned.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.