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With each week seemingly yielding another Middle East monarchy or dictatorship in jeopardy, the price of oil and the US Oil Fund (NYSEARCA:USO) have moved steadily higher. The dollar has continued its descent lately, supporting a higher price for West Texas Intermediate and Brent Sweet.

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The Brent Sweet Oil Fund (NYSEARCA:BNO) looks a bit toppy here.

West Texas crude has been late to the party, but the shutdown of Libyan production and the jeopardization of the Suez transportation route and other production shutdowns have added interest in western oil markets.

We have a few favorite names in the oil patch and are seeing significant premiums in the options markets for downside protection. Since we think higher oil prices may be here to stay, we think the risk-reward equation favors put-sales.

ATP Oil and Gas (ATPG): We like the March, April, and May contracts at strike price $20 for put-sales. ATP has a lot of good things going for it and plenty of shares are still short to maintain the rise.

Expires Symbol Last Chg Bid Ask Vol Open Int
Mar 11 ATPG110319C00020000 0.52 0.27 0.53 0.56 416 7813
Apr 11 ATPG110416C00020000 1.2 0.05 1.17 1.23 416 1401
Jun 11 ATPG110618C00020000 2.08 0.3 2.08 2.15 52 2167

Ultra Petroleum (NYSE:UPL): We like the April and June 2011 contracts at the $45 strike. Time value decay and implied volatility should dampen going forward.

Expires Symbol Last Chg Bid Ask Vol Open Int
Apr 11 UPL110416P00045000 3.1 0 2.8 3.1 1 73
Jun 11 UPL110618P00045000 3.7 0 3.9 4.1 6 227

GMX Resources (GMXR): GMX is a newcomer to the oil markets and only in January initiated positions in the Niobrara and Bakken (Dakota) plays to extract oil. Eventually, earnings from oil should constitute over a quarter of EPS. We like the $6 strike puts for sale, for April, May and August 2011.

Expires Symbol Last Chg Bid Ask Vol Open Int
Apr 11 GMXR110416P00006000 0.8 0.05 0.65 0.95 175 158
May 11 GMXR110521P00006000 1 0 0.95 1.1 10 94
Aug 11 GMXR110820P00006000 1.45 0 1.15 1.45 0 310

Exxon Mobil (NYSE:XOM): Exxon has relatively little downside, especially given higher oil prices are not yet factored into the firm's valuation. We like the more thinly traded July and October 2011 puts for sale at the $85 strike.

Expires Symbol Last Chg Bid Ask Vol Open Int
Jul 11 XOM110716P00085000 4.35 0.12 4.45 4.55 169 5363
Oct 11 XOM111022P00085000 6 0.13 6.15 6.25 26 1354

Chevron (NYSE:CVX): Chevron remains well-diversified and the current market price also does not factor in $100+ oil at West Texas and Brent prices. We like the less populated June and September 2011 puts for sale. Volume should pick up into the next two options expirations for March and April 2011.

Expires Symbol Last Chg Bid Ask Vol Open Int
Jun 11 CVX110618P00100000 3.5 0.45 3.55 3.65 628 6585
Sep 11 CVX110917P00100000 5.7 0.25 5.65 5.75 214 1845

TransOcean (NYSE:RIG): We like TransOcean's exposure to the deep-water worldwide. For put-sales we think downside risk remains reasonable. The more lightly traded May and August 2011 puts at strike $85 have ample premium.

Expires Symbol Last Chg Bid Ask Vol Open Int
May 11 RIG110521P00085000 5.9 0 5.9 6.05 27 1767
Aug 11 RIG110820P00085000 8.85 0.32 8.7 8.85 31 418

Devon Energy (NYSE:DVN): Devon recently increased its quarterly dividend, showing strength in its balance sheet and cash flow statement. We like the lightly-traded July and October 2011 puts for sale at strike $90.

Expires Symbol Last Chg Bid Ask Vol Open Int
Jul 11 DVN110716P00090000 6.2 0.3 5.95 6.1 12 314
Oct 11 DVN111022P00090000 8.35 0 8.05 8.25 0 14

Apache (NYSE:APA): Apache has consistently increased North American production of oil and liquids. Last year, the company recorded a record $3 billion in earnings off of a 13% production increase. We think downside is limited. We like the July and October 2011 puts for sale at strike $120.

Expires Symbol Last Chg Bid Ask Vol Open Int
Jul 11 APA110716P00120000 8.35 0.5 8.2 8.35 30 1927
Oct 11 APA111022P00120000 12.27 0 11.4 11.7 0 137

ConocoPhillips (NYSE:COP): We think Conoco's growth prospects remain bright and we appreciate the company's diversification. Here, we like the more lightly-traded May and August 2011 puts at the $75 strike.

Expires Symbol Last Chg Bid Ask Vol Open Int
May 11 COP110521P00075000 2.5 0.36 2.41 2.45 636 3988
Aug 11 COP110820P00075000 4.25 0.15 4.25 4.35 167 1154

British Petroleum (NYSE:BP): Volatility remains mildly elevated in this name many months after its issues at Macondo with the DeepWater Horizon rig. We think downside is reasonable and favors selling the strike $45 puts for October 2011.

Expires Symbol Last Chg Bid Ask Vol Open Int
Oct 11 BP111022P00045000 2.95 0.41 2.96 3 7 88

Disclosure: I am long GMXR.

Source: 10 Safe Plays for Higher Oil if Saudi Arabia Is Next

Additional disclosure: Short GMXR puts; may initiate a position in ATPG over the next 72 hours.