DVN – Devon Energy Corp. – Shares of the independent oil and gas exploration and production company are up 2.95% to $63.45 as of 12:20 pm (ET) after earlier rallying 3.35% to touch an intraday high of $63.69. The rebound in the price of the underlying shares today perhaps spurred investor demand for near-term call options. Optimistic options traders anticipating continued upward momentum in Devon’s share price picked up 1,000 calls at the June $65 strike for an average premium of $1.01 apiece. Investors long these contracts stand ready to accrue profits if the firm’s shares rally another 4% over the current price of $63.45 to surpass the average breakeven price of $66.01 by June expiration. Buying interest spread to the higher June $67.5 strike where bullish traders purchased approximately 2,300 call options at an average premium of $0.47 each. Higher-strike call buyers make money if Devon Energy Corp.’s shares jump 7.10% to exceed the breakeven point at $67.97 by expiration. Shares of the underlying stock last surpassed $67.97 back on May 13, 2010, when DVN traded at an intraday high of $69.30.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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