TICKER: DVN

Hey Traders,

Time to put your volatility hat on and take a dance with Devon Energy Inc (Ticker: DVN).  I think DVN is a good bargain based on cash flow, etc but that has not stopped the market from smoking it lower this year.

DVN was $64 and just $55 in early Sep.  From there everyone hit the bricks on anything related to energy until this weekend when the Mideast turmoil reminded everyone again how sticky things are.

1 year chart of DVN with 90 day IVs

We have some higher IVs, so let’s go hunting.

6 month highs in IV is nothing to sneeze at

IV raged higher into the weekend with traders bidding up calls all across the board.  DVN itself just bounced $5.00 from a recent low of mid-$43 area.  Maybe the takeover of Pioneer Natural Resources (Ticker: PXD) has the animal spirits in oil and gas back again.  Exxon Mobile Corp (Ticker: XOM) is not the only big oil company with some cash in its pockets.

For  a trade here, I like long call spreads.  I am already long DVN in the OP Mentoring Div+ strategy from higher prices so a $60 take out would not be terrible for me… (and btw if you want early access to our Trading Desk for more stocks like these give us a call or schedule an appointment https://optionpit.com/contact-us to see if you’re right for OP Mentoring –  Also, the call spreads look reasonably priced for the Jan2024 50/60 for $2.50.  That would be a nice return on a $60 takeout.

We hope this gives you some insight into our volatile energy market. We’ll have a new ticker and updates next week – here in the Northeast – the leaves are about to change… get excited!

Questions about that? Leave a comment below!

To Your Trading Success,

AG