Investors in Devon Energy Corp. (DVN) saw new options trading begin today for contracts expiring on May 22. Notably, a put contract at a $49.00 strike price has a current bid of $0.43, allowing investors to purchase stock at an effective cost basis of $48.57 if they sell to open the contract. This represents roughly a 1% discount to DVN’s current trading price of $49.59.
Additionally, a call contract at a $51.00 strike price is priced at $0.51. Purchasing DVN stock and selling this covered call could yield a total return of 3.87% if exercised at expiration, excluding dividends. The likelihood of the put contract expiring worthless is 59%, while the call contract has a 52% chance of expiring worthless. The implied volatilities are 40% for the put and 41% for the call.
