How to Capture Devon Energy's Potential With an Options Trade

NEW YORK (TheStreet) -- Since 1971 Devon Energy (DVN) has been in the oil and gas exploration and production business. Its timeline is proof of its staying power in one tough industry that has seen plenty of ups and downs.

Devon's focus is on North American energy properties. Thus, its stock and shareholders are insulated from international problems that tend to pop up and affect the world's supply of energy. At times, this has been an asset for DVN.

Today the big focus in the oil and gas world is the price of oil, as we all know that it has been rather volatile over the past year. One year ago, DVN was trading around the mid $70s and then climbed to $80 by the end of June. After that, it went south, trading by mid-December at its current 52-week low of just below $52.

The recent high was more than $69 reached one month ago. However, if you look back six months ago and compare the price movement of DVN to the U.S. Oil Fund ETF (USO), you will find that DVN has gained 9% in price over this time frame (back to December 2014), while USO has lost 23% of its value! That divergence of price performance is potential "bar bet" intel! And it speaks well to Devon's current stock price, especially should oil move up in price over the coming summer months.

Fundamentally DVN is a well-managed company with a decent enough balance sheet to be able to handle whatever pops up next in the oil sector. DVN has for years now been mentioned as a possible takeover candidate, which tends to keep the shorts at bay if nothing else.

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