The important thing to understand is that oil puts are a hedge to protect the positive plays -- they are not expected to make money while the bulk of the portfolio is moving up, but they sure do work great when the market turns.
ExxonMobil Corp. (XOM) seems determined to test $80 because certainly it must be worth 70% more than it was on Jan 1st, having picked up the entire market cap of ConocoPhillips (COP) and Chevron Corp. (CVX) combined!
That's right, without hiring a single person, adding a single well, discovering one more barrel (I'm pretty sure they're not even looking) or cutting a single executive's compensation package -- without even a rise in the price of the asset they sell, without even projecting positive earnings trends for 2007, XOM has added, this year alone, the ENTIRE value of COP, who will sell $195B worth of oil this year at a $14B profit as well as the ENTIRE value of Chevron Corp. (CVX), who will move $190B worth of oil with an $18B profit.
XOM manages all this without all that messy actual selling of more stuff, or adding to those silly reserves (I mean really, why bother?) or hiring the 95,000 people it takes COP and CVX to sell that extra $385B worth of stuff.
Congrats to all the XOM investors for seeing this cleverly hidden $200B in value that was totally missed by the markets as recently as July 1st, when oil was at $80 a barrel. You guys are truly market visionaries, boldly going where no investor has gone before -- closing in on that magic $500B mark as this party is never going to stop -- EVER!