Unusual Options Activity: Devon Energy Corporation (DVN)

Shares of energy explorer and producer Devon Energy Corporation (DVN) are up nearly four-fold in the past year as energy prices, particularly natural gas, are on the rise. One trader sees shares moving even higher in the coming weeks.

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  • That’s based on the December $46 calls. With 52 days until expiration, 6,145 options traded against a prior open interest of 217, for a 30-fold rise in volume. The buyer of the calls paid $0.94 to make the trade.

    With shares currently just over $40, they would need to rise about $6, or 15 percent, for the option to move in-the-money. That’s a readily achievable move higher, given the performance of shares so far.

    Even with a 360 percent return in the past year, shares trade at just 10 times forward earnings thank to a 294 percent jump in revenue as well.

    Action to take: Investors may like shares here. Besides the continued upside potential in shares, the stock yields 1.1 percent, a dividend that could be increased if energy prices stay higher for longer.

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  • Traders may like the calls, given their low relative price and the high chance of their moving in-the-money. If shares move quickly enough, traders could grab a triple-digit return and be out of the trade while it still has some time left on the clock.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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