My 2026 Stock Pick Is Up 25%. Here’s How I’m Playing It Now.

I am happy to report that my repeated covered call trade around Akamai Technologies (AKAM) from two weeks ago is off to an auspicious start. The shares rallied more than 25% on Friday after posting the company reported first-quarter results and announced a landmark cloud AI infrastructure deal.

Akamai is one of a half dozen technology companies within my portfolio, as I am underweight the sector overall. This is due to valuations and what I perceive as an AI bubble forming.

In contrast, I became heavily overweight the energy sector in late 2025 and very early in 2026. This was even as most investment banks such as Goldman Sachs (GS) had projected a tepid forecast for energy prices this year. It was a contrarian play and based mainly on the sector being one of the few where I spotted many relative bargains.

Obviously, I could not forecast that Iran would become the U.S.’s latest foray into the Middle East. This has spiked energy prices and made energy one of the best-performing sectors in the market in Q1 and 2026.

I am now letting most of my energy-focused covered call trades just expire in the money in the weeks and months ahead. Once the Strait of Hormuz is on its way to being reopened, I expect energy prices to fall significantly. However, there's one holding, Devon Energy ( (DVN) ), where I'm at least maintaining my current position, as my May covered call holdings expire in the money this coming Friday.

Devon was my stock pick of the year for 2026. It was a cautious selection as I still believe the overall market will end lower in 2026, just like the indexes have the last two midterm years of 2018 and 2022. Devon shares are up roughly 25% year to date, including dividends.

There have been some significant developments around the E&P firm in 2026. The most substantial of these was the company’s announced merger with fellow mid-cap E&P play Coterra Energy (CTRA) , with the combined entity to retain Devon’s name.

The companies have roughly identical proven reserves. Their makeup is different, however. Devon’s footprint and production consists of approximately two-thirds oil and the rest from natural gas and natural gas liquids. Coterra’s productive assets consist of the oppositive profile. The combined company will be a more diversified E&P firm and have around five billion barrels of proven reserves.

Devon currently trades just above the $45. The company just disclosed a significant $8 billion stock repurchase program, which will activate once the merger closes. Management projects the combined firm will achieve at least $1 billion in annual synergies.

This past week Devon bumped up its quarterly dividend payout by a third starting in the second quarter of this year. Management also stated that production would increase under the new entity. The "new Devon" will likely divest some non-core assets to reduce debt.

Given these catalysts, it is not surprising that Jefferies (JEF) upgraded the shares late this past week, to Buy from Hold, and boosted its price target, to $62 from $53. Raymond James, similarly, bumped up its price target by $10, to $72, on Tuesday.

The stock certainly isn’t expensive, trading at just under nine times forward earnings with a current dividend yield of just under 3% after the recent dividend hike.

Option Strategy

Here is how one can initiate a position in DVN utilizing a covered call strategy. As a reminder, covered-call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.

Selecting the October $45 call strikes, fashion a covered call order with a net debit in the $40.70 to $40.90 a share range (net stock price - option premium). Liquidity is excellent with the options against this equity.

This strategy provides downside protection of approximately 12% over the trade’s duration, which includes two dividend payouts of $0.32 a share.

The strategy also provides similar upside return potential, including dividends, even if the stock trades slightly down over its option duration.

At the time of publication, Jensen was long AKAM and DVN.