This post was written by Minyanville contributor Steve Smith.

Shares of CardioNet (NASDAQ: BEAT) shares are off $0.20 to $18.60 and option volume is three times the daily average. The focus is buying in the June $17.50 put which has seen over 5,100 contracts trade, 90% of which occurred at the ask, and exceeds prior open interest of if 1,018 contracts. This new put buying is driving up implied volatility 14% to the 65% level this morning.

CREE Inc. (NASDAQ: CREE) shares are up over 12% to $31.30 after the electronics parts manufacturer pre-announced and raised guidance. Options running 3X the daily average with 85% of trades on the call side. Active strikes are the include June $30 call and July $30 calls, with latter's volume exceeding strike's of 295 exceeding prior open interest. Notable is buying in longer dated series; the Sep $30 call, Dec $35 call and Jan 2010 $30 call have all traded over 200 contracts all of which exceed their strike's prior open interest.

Patriot Coal (NYSE: PCX) is up 19 cents to $9.15 and 2,500 Jun 10 calls traded. Nearly all the volume has been done at the asking price suggesting this speculative call buying.

Analyst upgrades:

• Citigroup upgraded Patriot Coal (NYSE: PCX) to Hold from Sell on easing credit and liquidity concerns following the company's guidance. The firm raised its target on the stock to $7.50 from $4.
  
• UBS upgraded Research In Motion (NASDAQ: RIMM) to Buy from Neutral and raised their target to $90 from $65 as they expect pent-up replacement demand in enterprise to drive 2010 estimates higher and for the consumer smartphone opportunity to grow in 2009 and 2010.
  
• Goldman upgraded Suncor (NYSE: SU) to Conviction Buy from Sell and raised their target to $33 from $25 citing their bullish view on crude oil for 2H09 and 2010 and in the company's ability to lower operating and capital costs in the oil sands region.
• Canadian National (CNI) was raised to Overweight from Neutral at JP Morgan.
  
• Applied Micro Circuits (NASDAQ: AMCC) was lifted at Oppenheimer to Overweight from Neutral.
  
• QLogic (NASDAQ: QLGC) was upgraded to Outperform from Neutral at Baird.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

Analyst upgrades:

• Wachovia upgraded shares of Exelon (NYSE: EXC) to Outperform from Market Perform to reflect the company's attractive nuclear fleets and strong operational track record.
  
• Jesup & Lamont upgraded Ormat Technologies Inc. (NYSE: ORA) to Buy from Hold on valuation and increasing visibility on near-term Products revenue.
  
• RBC Capital upgraded Memc Electronic (NYSE: WFR) to Outperform from Sector Perform on expectations of improved demand growth following the likely eight-year extension of the US solar tax credit program.
• AmBev (NYSE: ABV) was raised to Outperform from Neutral at Credit Suisse.
  
• AmerisourceBergen (NYSE: ABC) was upgraded at Merrill Lynch to Buy from Neutral.
  
• Piper upgraded Anadys Pharma (NASDAQ: ANDS) to Neutral from Sell.

Analyst downgrades:

Patriot Coal (NYSE: PCX) is recently up $8.91 to $117.

Freidman Billings says: "we are raising our 2009 and 2010 steam coal price outlook by about 25%."

PCX June option implied volatility of 70 is above its 26-week average of 56 according to Track Data, suggesting larger price movement.

Massey Energy (NYSE: MEE), a coal producer, is recently up $5.52 to $70.14.

Freidman Billings upgraded MEE to Outperform from Market Perform.

MEE June option implied volatility of 65 is above its 26-week average of 54, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

If you want to invest in an energy resource that's cheap, has a dependable supply and a proven track record, don't forget about coal. In the very (very) long term, it may become obsolete, but for the foreseeable future coal is an excellent investment for an energy source that can immediately step in to cover the rising cost and dwindling supply of oil, while alternative energy sources need to be more fully developed before they can take over as primary suppliers of electricity and more.

And if you're going to invest in coal, Peabody Energy Corporation (NYSE: BTU) is an excellent bet. Frequently considered the best coal producer in its class, Peabody has the resources and size to weather any blips in the sometimes volatile coal market. Its U.S. operation is immense -- in 2006, 20% of all coal mined in America was produced by Peabody, and today, 10% of electricity produced by any source is fueled by the company's coal.

By far the most profitable part of its American operation are the company's mines in the Western states, primarily in the Powder River Basin in Wyoming and Montana, which account for 75% of Peabody's production. By contrast, the Eastern states production is less profitable, mostly due to transportation problems. To that end, Peabody has recently spun off Patriot Coal Corp. (NYSE: PCX), based out of Appalachia and Illinois, which analysts say should reduce costs without having a significant impact on the income stream.

MOST NOTEWORTHY: FreeSeas, Nektar, Altus Pharmaceuticals and AbitibiBowater were today's noteworthy initiations:

• Cantor initiated shares of FreeSeas (NASDAQ: FREE) with a Buy rating and $10 target, as they expect the company to benefit from the continued strength in the dry bulk market.
  
• JP Morgan resumed coverage of Nektar (NASDAQ: NKTR) with an Overweight rating, as they view weakness from the discontinuation of Exubera as a buying opportunity given the company's base royalty business and pipeline opportunities.
  
• Altus Pharmaceuticals (NASDAQ: ALTU) was initiated with a Buy rating and $19 target at Jefferies. The firm expects news flow from the company's two lead products over the next 6-12 months that should act as catalysts.
  
• AbitibiBowater (NYSE: ABH) was initiated with a Sell rating and $18 target at Banc of America, as they are cautious on newsprint trends; the firm recommends reducing existing positions.

OTHER INITIATIONS:

• Caris initiated Collective Brands (NYSE: PSS) with an Average rating and $18 target and Under Armour (NYSE: UA) with an Above Average rating.
  
• Stifel started shares of Patriot Coal (NYSE: PCX) with a Hold rating.
  
• PetroChina (NYSE: PTR) was initiated with a Sell rating at Goldman.