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Energy stocks have gone from bad to good in the New Year, and one options trader is looking for the bounce to continue.
Check out the activity yesterday in Oklahoma City-based driller Devon Energy (DVN):
Calls fix the price where a stock can be purchased, so they can make money when shares move higher. (See our Knowledge Center.) Tuesday’s investor apparently came into the session riding a profitable trade in the 24s. He or she then exited those contracts and rolled into twice as many of the 28s.
Devon Energy (DVN) chart showing 50-day MA and options-volume spike.
They recovered $290,000 of capital and have the potential for greater leverage if the shares keep climbing.
DVN rose 0.79 percent to $25.55, and is 25 percent above its December 26 low. Energy, by far the worst sector in the fourth-quarter, is one of the best performers so far in 2019.
Overall option volume in the stock was 4 times the average over the last month, with calls outnumbering puts by a bullish 8-to-1 ratio.
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