In case you haven’t read the first part of our Devon cash cow journey, you can read the first part here. We wanted to write an update because we started our journey at the end of May and it’s now the end of September and it’s a good time to report results.
We updated our trading graph which makes it easier to see our money & trades journey with the stock and selling calls.
We sold a few more rounds of calls and collected some dividends to round out our total income gains at $5,000 with our last transaction selling calls into November expiry.
Our initial investment in DVN was about $50,000 and a $5,000 return giving us a 10 percent return over 4 months or about 30 percent annualized if we can maintain this strategy for another 12 months.
Oil has been very volatile and while it closed at $90.77 there is no guarantee it will stay there nor is there any guarantee that DVN or any other oil company will benefit from it.
The Fed is poised to meet in November and the CME Fed watch tool thinks there is an 85% chance of no rate hike. A surprise rate hike in November may spook markets and oil or inaction may spur some other type of volatility to the upside. In either event, we expect more volatility so this will be good for options trades.
If there is a strong pull back in oil or DVN we may buy our options back cheap and sell January calls but you won’t know unless you’ve stay tuned, stay profitable and stay solvent.