Friday, February 25, 2011

Trade Idea: Long DVN (Devon Energy Corp)

DVN could be breaking out here and on its way to $100.  There are a lot of option trades you could put on.  Let me suggest a couple:

Conservative Idea: The buy write (long stock and short the 95 or 100 call. There is a .16 divided on 3/11/11 (according to LiveVolPro) Or you can do the the Synthetic buy write by shorting a put.

More Aggressive: Bull vertical risk reversal: Long the April 95/100 for 1.42ish and sell the April 85 put for 1.60ish.  Gets you long about 5% lower and gives you a shot for $5 if DVN does rip to $100

If you have any questions please feel free to ask in the comments section.

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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