Paper bought 5,072 DVN Aug 41 calls & sold 10,144 Aug 44 calls paying a net debit of .22.
Devon Energy, trading 36.40 with an IV30 of 49.66 and an HV10 of 35.42 has earrings on August 2.? The stock, with an ADV of 9,500 and an OI of 189,000 contracts, saw a large 1-by-2 trade in August.? A customer bought 5,072 of the August 41 calls and sold 10144 of the August 44 calls paying a net debit of .22 for the Aug 41/44 call 1 by 2.
This trade does well if DVN rallies 10-15% on its earnings but starts to run into problems if the stock runs more than 25%, which would be a huge move for DVN.? The trader reaches maximum profit if the stock settles 44, but is probably looking for the stock to move toward 41-42 dollars a share on earnings, which would be a rally of about 15%.? If DVN rallies and vol comes in the trade will do extremely well.
This trade is bullish DVN and bearish DVN vol.