Devon Energy Corporation (DVN) is involved in the exploration and development of oil, natural gas and NGL’s. The stock is a consensus “Buy/Hold” on Wall Street after strong sessions Tuesday and so far Wednesday and has received high price targets from a lot of banks. The stock is still seemingly a value play trading fewer times earnings than industry counterparts and the market as a whole. That combined with 4x usual volume and making new highs would suggest a continued rally.
Management seems to be performing well after making moves to refocus efforts and funds on domestic development, selling off international assets. This is a play on the likely expansion of US energy production. The sector has been leading the market and Devon has been leading the sector this year, so it’s easy to see why traders are long DVN.
Devon looks great on the cloud chart as well, breaking through strong resistance this morning to the upside and continuing to push higher.
The Trade: Buying the DVN July 82.5 Calls for $.33
Targets: Sell 20% at $.43, Sell 20% at $.53, Sell 20% at $.65, Sell 20% at $.80, Sell 20% at $1.00
Greeks of this Trade:
Delta: Long
Gamma; Long
Theta: Short
Vega: Long