Options Flow: Devon Energy Calls, Academy Sports Puts
Unusual volume hits DVN with 49,000 calls trading at 23x average. ASO sees 6,000 puts in ratio spread targeting $50 by next Friday.
Two names are generating outsized options volume this morning.
Devon Energy saw 49,341 call contracts trade by midday Friday—23 times its average daily volume and 11 times today's put activity. Academy Sports & Outdoors moved in the opposite direction, with 6,062 puts trading at 20 times normal volume.
The positioning in both names tells a story worth unpacking.
Devon Energy: Selling the Rallies
DVN call volume looks bullish at first glance. But the flow details matter.
Most of the activity concentrates in the February 20 and April 17 expirations, with traders targeting the $40 strike. The pattern suggests covered call writing or premium harvesting rather than directional bets on higher prices.
Multiple block orders hit the bid throughout the morning—a selling signature, not buying. Traders are collecting premium by selling calls against existing positions or expressing a view that DVN stalls near current levels.
Devon trades around $37.50, roughly 7% below the $40 strike. The calls expire worthless if shares stay below that level, letting sellers pocket the premium. If Devon rallies through $40, sellers either deliver shares or buy back at higher prices.
The setup makes sense given oil's recent volatility. Crude has bounced between $70 and $80 for months without establishing a clear trend. Range-bound energy prices favor premium sellers over directional traders.
Devon's fundamentals remain solid—the company generates substantial free cash flow at current oil prices and returns capital through buybacks and dividends. But "solid" doesn't mean "exciting." The options market is pricing modest expectations rather than a breakout.
Academy Sports: Bearish Ratio Spread
The ASO trade is more explicitly directional.
Someone executed a 1x2 ratio spread in January 23 expiration puts. They bought 2,000 contracts at the $55 strike and sold 4,000 at the $50 strike, collecting a $0.76 net credit on the combination.
This structure maximizes profit if ASO settles at exactly $50 next Friday. The long $55 puts gain value as the stock falls, while the short $50 puts expire worthless. Below $50, the extra short puts start creating risk—the trader could be assigned shares at prices below where the stock trades.
Academy closed around $56.80 Thursday. A move to $50 represents an 12% decline in eight calendar days. That's aggressive positioning.
Why the bearishness? Academy reports Q4 earnings next week, and sporting goods retail has been mixed. Dick's Sporting Goods posted decent numbers, but the outdoor and hunting categories that Academy over-indexes have shown weakness.
The ratio spread also benefits from time decay. Even if ASO drifts lower without hitting $50, the premium collected at entry provides a cushion. The trader profits unless the stock either rallies significantly or collapses far below $50.
Energy Options Context
Devon isn't alone in seeing elevated energy options activity.
ConocoPhillips attracted bullish flow Thursday, with large accounts accumulating calls into the oil market's ongoing volatility. Occidental Petroleum has seen call buying tied to dividend expectations—traders betting on a payout increase announcement.
The common thread is income generation. Energy companies trade at low multiples and return cash to shareholders, making them attractive for covered call strategies and yield enhancement. The high volatility premiums available in oil names fund those strategies.
For Devon specifically, the $40 level represents both technical resistance and a psychological threshold. Breaking above it would signal renewed momentum; staying below confirms the range-trading thesis that options sellers are betting on.
Trading Considerations
Options flow doesn't predict direction—it reveals positioning. The Devon pattern suggests institutional accounts harvesting premium, not retail traders piling into calls expecting a moonshot.
Academy's ratio spread is higher conviction. Someone with capital is betting the stock trades lower into earnings without collapsing entirely. The specific $50 target and short timeframe create a defined outcome: profit if ASO lands there, loss if it doesn't.
Both trades expire soon. DVN's February and April options have weeks of time value to decay. ASO's January 23 puts settle in seven days.
Check the options chain yourself before acting. The flow data shows what happened, not why—and the "why" matters more than the "what" for taking the other side.