Milking The Devon Cash Cow

One of our favorite profitable trades for 2023 has been taking a position in DVN. We’ll walk you through the mechanics of how profitable this trade has been but first we’ll cover how we found this trade.

We watch CNBC regularly to get some ideas and back in April we watched Jenny Harrington on CNBC speak about energy companies, including Devon.

In May we took the plunge and pick up 1000 shares of Devon at $50 and sold June 09 $51 calls for $1 and raked in our first $1000 return. By the end of May those calls were worth $0.18 so we bought them back for $180 (Profit: $1000-$180=$820).

In early June we sold ten August 18 $55 calls for $1.35 and earned $1350 but on June 30 we also received $720 in dividends bringing our June total ($1350+$720=$2070).

In early July we bought back our August calls for $0.45 (-$450) because we felt we could sell them later for higher and in mid June we sold ten September calls for $1 ($+1000) so our profit for July was $550.

In mid August we have bought back the September calls for $0.25 (-$250). We did this because Devon will go ex-Dividend on Sept 14 2023 and pay a dividend of $0.49/share so we expect $490 in dividend income by holding on to the stock. It is possible that Devon rallies as we approach the ex-dividend date so we may sell October calls and earn additional premiums in addition to keeping the dividend.

So our profits so far are $820+$2070+$550-$250+$490 = $3680. Given our initial invest of $50k, our return so far is 7.36% from May to August (4 months).

We plan on continuing to collect dividends and selling calls on Devon but with oil continuing to climb, it’s possible we’ll make higher returns from here if the oil up trend continues.

Of course, we’re not giving anyone reading this post any financial advice, as always read our Disclaimer page and do your own due diligence or seek the help of an investment professional. If you want to know the exciting conclusion to our Devon trade, stay tuned, stay profitable and stay solvent…