Here's a Slick Idea for Playing an Overdone Oil Selloff

Oil is a blood bath Friday. Rumors of the president opening up the Strategic Petroleum Reserve (SPR), Covid in Europe, and demand fears are hurting all the oil producers. However, this is WAY over done, and the selloff is a bit too aggressive.

There are oil names with great balance sheets that are making a lot of money right now, and will continue to do so. Oil is probably going to make a run at $100 next year as demand continues to outstrip supply and OPEC holds the line.

Devon Energy (DVN) has a really strong balance sheet and is getting punished today. The January $41 calls cost less than $3.00.

I think DVN is going to $45. I would be a buyer.

Trade:

Buy to open 1 DVN Jan.21 $41 call for $2.90.

At the time of publication, Sebastian had no positions in any securities mentioned.