Investors in Devon Energy Corp. (DVN) will see new options trading begin today, with expiration set for June 12. Notably, a put contract at a $48.00 strike price has a current bid of 7 cents, which suggests an effective cost basis of $47.93 for investors purchasing the stock at today’s price of $50.53. This represents a 5% discount to the current trading price, with a 68% probability that the put contract could expire worthless.
Additionally, a call contract at a $51.00 strike price has a current bid of 68 cents. If an investor buys shares at the current price and sells the call as a covered call, they are committing to sell the stock at $51.00, yielding an estimated total return of 2.28% if exercised. This call option’s strike price is approximately 1% above the current trading price, with a 48% chance of expiring worthless.
The implied volatility for the put contract is 46%, while the call contract’s is 40%. The actual trailing twelve-month volatility for DVN is calculated at 32%.
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