DVN Butterfly Strategy
DVN (Devon Energy Corporation), in the Energy sector, (Oil & Gas Exploration & Production industry), listed on NYSE.
Devon Energy Corporation, an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 5,134 gross wells. Devon Energy Corporation was incorporated in 1971 and is headquartered in Oklahoma City, Oklahoma.
DVN (Devon Energy Corporation) trades in the Energy sector, specifically Oil & Gas Exploration & Production, with a market capitalization of approximately $29.15B, a trailing P/E of 12.84, a beta of 0.48 versus the broader market, a 52-week range of 30.24-52.71, average daily share volume of 15.5M, a public-listing history dating back to 1985, approximately 2K full-time employees. These structural characteristics shape how DVN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.48 indicates DVN has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. DVN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on DVN?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
Current DVN snapshot
As of May 15, 2026, spot at $49.41, ATM IV 38.30%, IV rank 58.34%, expected move 10.98%. The butterfly on DVN below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 28-day expiry.
Why this butterfly structure on DVN specifically: DVN IV at 38.30% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 10.98% (roughly $5.42 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated DVN expiries trade a higher absolute premium for lower per-day decay. Position sizing on DVN should anchor to the underlying notional of $49.41 per share and to the trader's directional view on DVN stock.
DVN butterfly setup
The DVN butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With DVN near $49.41, the first option leg uses a $47.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DVN chain at a 28-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 DVN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $47.00 | $3.43 |
| Sell 2 | Call | $49.00 | $2.37 |
| Buy 1 | Call | $52.00 | $1.09 |
DVN butterfly risk and reward
- Net Premium / Debit
- +$22.00
- Max Profit (per contract)
- $205.33
- Max Loss (per contract)
- -$78.00
- Breakeven(s)
- $51.22
- Risk / Reward Ratio
- 2.632
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
DVN butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DVN. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | +$22.00 |
| $10.93 | -77.9% | +$22.00 |
| $21.86 | -55.8% | +$22.00 |
| $32.78 | -33.7% | +$22.00 |
| $43.70 | -11.5% | +$22.00 |
| $54.63 | +10.6% | -$78.00 |
| $65.55 | +32.7% | -$78.00 |
| $76.48 | +54.8% | -$78.00 |
| $87.40 | +76.9% | -$78.00 |
| $98.32 | +99.0% | -$78.00 |
When traders use butterfly on DVN
Butterflies on DVN are pinning bets - traders use them when they expect DVN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
DVN thesis for this butterfly
The market-implied 1-standard-deviation range for DVN extends from approximately $43.99 on the downside to $54.83 on the upside. A DVN long call butterfly is a pinning play: it pays maximum at the middle strike if DVN settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DVN IV rank near 58.34% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on DVN should anchor more to the directional view and the expected-move geometry. As a Energy name, DVN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DVN-specific events.
DVN butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. DVN positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DVN alongside the broader basket even when DVN-specific fundamentals are unchanged. Always rebuild the position from current DVN chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DVN?
- A butterfly on DVN is the butterfly strategy applied to DVN (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With DVN stock trading near $49.41, the strikes shown on this page are snapped to the nearest listed DVN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DVN butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the DVN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 38.30%), the computed maximum profit is $205.33 per contract and the computed maximum loss is -$78.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DVN butterfly?
- The breakeven for the DVN butterfly priced on this page is roughly $51.22 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current DVN market-implied 1-standard-deviation expected move is approximately 10.98%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DVN?
- Butterflies on DVN are pinning bets - traders use them when they expect DVN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current DVN implied volatility affect this butterfly?
- DVN ATM IV is at 38.30% with IV rank near 58.34%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.