Energy Bulls Charge Into Devon

By David Russell of OptionMonster

NEW YORK --  Devon Energy (DVN) has been blasting higher along with other shale names, and the bulls are looking for more.

OptionMonster's tracking systems identified heavy buying in the July 80 calls on Friday, with more than 16,000 trading for 80 cents to $1.19. The volume was well above the strike's previous open interest of 9,262 contracts, indicating that new positions were initiated.

Long calls lock in the price where investors can buy a stock, letting them cheaply position for a rally with limited risk. The contracts can also generate significant leverage if shares move in the right direction, but they can quickly lose value if the stock drops.

Devon shares gained 1.35% on Friday to close at $78.04, just off their session high. The oil and natural-gas producer has been trending steadily higher from below $65 in late March.

Total option volume in the name exceeded 25,600 contracts on Friday, more than triple its daily average for the last month. Overall calls outnumbered puts by a bullish 9-to-1 ratio.

Russell has no positions in DVN.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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