Devon Energy (DVN) 11/6/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 06, 2009 8:32 AM EDT

Devon Energy (NYSE: DVN) closed yesterday at $68.93. So far the stock has hit a 52-week low of $38.55 and 52-week high of $80.21. Devon Energy stock has been showing support around 66.17 and resistance in the 70.41 range. Technical indicators for the stock are Bullish and S&P gives DVN a positive 4 STAR (out of 5) buy rating. DVN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 65 covered call (DVN AM) for a net debit in the $62.23 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 9.72% downside protection and a 4.45% assigned return rate for a 22.88% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the DVN Jan '11 30 Call (VVH AV) and selling the Jan '10 65 call (DVN AM) for a $32.60 debit. The trade has a 71 day life and would provide 9.18% downside protection and a 7.36% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). Devon Energy has a current annual dividend yield of 0.96%. [FBB-Seven Summits Research]

Click Symbol For More News On: (DVN)