Investors in Devon Energy Corp. (DVN) gained access to new options with a June 5th expiration. Notably, a put contract at the $47.00 strike price currently has a bid of $0.41. If sold to open, this contract would obligate the buyer to purchase shares at $47.00, leading to an effective cost basis of $46.59 per share, considering the premium. The current trading price is $47.66, representing a 1% discount to the strike price, with a 57% chance that the put contract expires worthless, offering a potential 0.87% return on cash committed.
On the call side, a contract at the $49.00 strike price is bid at $0.51. If shares are purchased at $47.66 and this covered call is sold, the investor could face a total return of 3.88% if the stock is called away by expiration, which also carries a 53% probability of expiring worthless. The premium collected would represent a 1.07% additional return, or 9.08% annualized. Implied volatilities for the put and call contracts are 43% and 46%, respectively.
The actual trailing twelve-month volatility stands at 32%, based on the last 251 trading days alongside today’s price.
