Investors in Devon Energy Corp. (DVN) initiated trading on new options today, set to expire on August 7th. A notable put contract with a $42.00 strike price has a current bid of $0.01, allowing investors to purchase shares at a reduced effective cost of $41.99. This strike price represents a 2% discount to the current trading price of $43.05, with a 60% chance of the contract expiring worthless.
On the call side, a $44.00 strike price call contract is also trading at a bid of $0.01. If an investor sells this covered call while holding shares, they commit to selling the stock at $44.00, potentially generating a 2.23% return if exercised. However, there is a 54% likelihood that this contract will expire worthless, allowing the investor to retain both the shares and premium collected. The implied volatilities for the put and call contracts are 41% and 39%, respectively, while the actual trailing twelve-month volatility is calculated at 34%.
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