Diamond Offshore Drilling (NYSE: DO - option chain) shares have been just about flat today after Standard & Poor's (NYSE: MHP) announced that the company will be added to the S&P 500 Index on a date still to be determined, replacing Weatherford International Ltd. (NYSE: WFT). This usually causes a surge in stock value as all the ETFs that track the S&P 500 now have to rush to add DO positions.

While DO is not rising today, it is also not falling sharply like the rest of the market, especially when compared to its peers like Transocean (NYSE: RIG), which just reported slowing earnings today and is down by more than 5%. If you think that DO won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on that stock.

Oil prices have definitely been gushing recently. Lately prices have been spiking due to the ongoing tensions between Iran and the West, but even before the recent flare with OPEC's second largest oil producer prices had started to climb.

After last summer's oil bonanza that saw prices head up to $80 a barrel, we saw quite a bit of cooling off in the oil market. As we headed into 2007 prices had fallen roughly 25% since the prior summer's highs and we were looking at $60 oil. At that time it looked like oil had taken about all the pain that it was going to, but then January opened our eyes to even further declines, in fact, much larger declines. On January 18 prices hit a 20 month low at the time of $50.25, roughly a 16.5% fall in the first two week of trading.

Since then we have seen prices head back toward $60 and have stayed for the most part between the high $50's and $60. Then troubled started up again with Iran and the last week or so prices have taken off again. Currently we see oil being priced at $65.76 after shooting up $1.68 today. So basically we have seen a 31.5% surge in prices over the last two months.