Potential Devon Energy (DVN) Trade Has $50.76 Breakeven

Print Share

Jan 14, 2013 (Marketintelligencecenter.com via COMTEX) -- Devon Energy Corp (NYSE:DVN) closed Friday's trading session at $54.26. In the past year, the stock has hit a 52-week low of $50.89 and 52-week high of $76.34. Devon Energy (DVN) stock has been showing support around $53.17 and resistance in the $54.81 range. Technical indicators for the stock are Bullish and S&P gives Devon Energy (DVN) a positive 4 STARS (out of 5) buy rating. For a hedged play on Devon Energy (DVN), look at the Apr '13 $52.50 covered call for a net debit in the $50.76 area. That is also the break-even stock price for this trade. This covered call has a duration of 96 days, provides 6.45% downside protection and an assigned return rate of 3.43% for an annualized return rate of 13.03% (for comparison purposes only). A lower-cost hedged play for Devon Energy (DVN) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Devon Energy (DVN) Jan '14 $32.50 call and selling the Apr '13 $52.50 call for a total debit of $18.50. The trade has a lifespan of 96 days and would provide 6.01% downside protection and an assigned return rate of 8.11% for an annualized return rate of 31% (for comparison purposes only). Devon Energy (DVN) has a current annual dividend yield of 1.50%.

MarketIntelligenceCenter.com

(C) Copyright 2013, Marketintelligencecenter.com. All rights reserved.

**********************************************************************

As of Thursday, 01-10-2013 23:59, the latest Comtex SmarTrendA? Alert,
an automated pattern recognition system, indicated a DOWNTREND on
05-04-2012 for DVN @ $65.13.

For more information on SmarTrend, contact your market data
provider or go to www.mysmartrend.com

SmarTrend is a registered trademark of Comtex News Network, Inc.
Copyright A? 2004-2013 Comtex News Network, Inc. All rights reserved.

Free Stock Analysis From Zacks

Includes Zacks Long-Term Recommendation and Target Price

Zacks Research is Reported On:

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.