Transocean Inc. (NYSE: RIG) shares are trading higher today after a Credit Suisse analyst reiterated his rating of RIG at Outperform following the regulatory approval of its $18 billion acquisition of Global Santa Fe (NYSE: GSF). If you think that the company 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 RIG.

After hitting a one-year low of $72.47 in January, the stock hit a one-year high of $131.00 earlier this month. RIG opened this morning at $128.49. So far today the stock has hit a low of $127.60 and a high of $131.51. As of 12:05, RIG is trading at $130.97, up $4.69 (3.7%). The chart for RIG looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $110 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just 2 months as long as RIG is above $110 at January expiration. RIG would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.

RIG hasn't been below $110 by more than a few cents since September, and has shown support around $115 recently. This trade could be risky if the price of oil drops off, but even if that happens, this stock could be protected by strong support RIG found around $110 over the past three months.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in RIG.

Research in Motion (NASDAQ-RIMM) is recently down $1.28 to $109.72 in pre-open trading.

• GSCO has a 12-month price target on RIMM. GSCO says: "We believe the prospects for growth in Latin America and Eastern Europe offers upside to our above consensus forecasts."
  
• RIMM November option implied volatility of 55 is above its 26-week average of 46 according to Track Data, suggesting larger risk.

GlobalSanta Fe (NYSE: GSF) is offshore oil and gas drilling contractor, owning or operating a drilling fleet of 37 premium jackup rigs, six heavy-duty, harsh environment jackups and 11 semisubmersibles.

• GSF is expected to report EPS on 10/31.
  
• On 7/23/07 GSF announced TransOcean (NYSE: RIG) shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each share of RIG they own. The transaction is expected to close before year end.
  
• GSF total option volume was heavy on 10/11 with 77,545 contracts trading on spreaders hedging intra-market & merger risks. GSF November option implied volatility of 35 is above its 26-week average of 31 according to Track Data, suggesting larger risk.

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

MOST NOTEWORTHY: GlobalSantaFe Corp, Transocean, Frontier Oil, Tesoro and Audio Codes were today's noteworthy upgrades:

• JP Morgan upgraded shares of GlobalSantaFe Corporation (NYSE: GSF) and Transocean Inc (NYSE: RIG) to Neutral from Underweight based on valuation and improving deepwater rig fundamentals.
  
• Frontier Oil Corporation (NYSE: FTO) was upgraded at Banc of America to Buy from Neutral as they believe the company's assets are ideally located to access cheap Canadian oil sands production. They feel the stock should trade closer to its replacement value, which they estimate at $55/share.
  
• The firm also raised Tesora Corporation (NYSE: TSO) to Buy from Neutral, as the firm believes Terero is the best play on the extended refining cycle given its exposure to California.
  
• CIBC upgraded shares of AudioCodes (NASDAQ: AUDC) to Sector Outperformer from Sector Performer on valuation after their checks suggested the company's business is stabilizing and cost cutting is tracking ahead of plan, which could bring upside EPS estimates.

OTHER UPGRADES:

• GSI Commerce (NASDAQ: GSIC) was upgraded to Buy from Hold at Jefferies.
  
• Apache Corporation (NYSE: APA) was upgraded to Buy from Neutral at Goldman Sachs.
  
• Amgen Inc (NASDAQ: AMGN) was upgraded to Buy from Neutral at Merrill Lynch.
  
• BB&T Capital upgraded shares of Skechers USA (NYSE: SKX) to Buy from Hold.
  
• Bernstein upgraded shares of Cognizant Technology (NASDAQ: CTSH) to Outperform from Market Perform.

Diamond Offshore Drilling (NYSE: DO) volatility slightly higher as DO at record high. DO, a drilling service provider to the energy industry, closed at $113.04. RIG and GSF, drilling service providers, announced a merger of equals on 7/23. DO August option implied volatility of 36 is above its 26-week average of 33 according to Track Data, suggesting slightly larger price risk.

Ensco International (NYSE: ESV) volatility elevated as ESV at record high. ESV, an offshore contract drilling company, closed at $65.90. RIG and GSF, drilling service providers, announced a merger of equals on 7/23. ESV has a market cap of $9.8 billion with long-term debt of $308 million. ESV had March 2007 quarterly net income of $232 million on total revenue of $514 million. LYON has a $59 price target on ESV. ESV August option implied volatility of 40 is above its 26-week average of 33 according to Track Data, indicating larger price fluctuations.

Atwood Oceanics (NYSE: ATW) August implied volatility elevated as ATW at record high. ATW is engaged in the business of international offshore drilling of exploratory and developmental oil and gas wells and related support management and consulting services. ATW closed at $74.36. ATW will report EPS on August 7th. RIG and GSF, drilling service providers, announced a merger of equals on 7/23. ATW August option implied volatility of 39 is above its 26-week average of 33 according to Track Data, suggesting larger risk.

Rowan (NYSE: RDC) August volatility elevated into EPS. RDC, a provider of international and domestic offshore contract drilling services, will announce EPS on August 2nd. Morgan Keegan says: "We are lowering our estimates on RDC as we build in lower day rate assumptions and a delayed recovery for US Gulf commodity jackups." RIG and GSF, drilling service providers, announced a merger of equals on 7/23. RDC August option implied volatility of 46 is above its 26-week average of 32 according to Track Data, suggesting larger risk.

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

MOST NOTEWORTHY: Microsoft (MSFT), Career Education Corp (CECO), Verizon Communications (VZ), Transocean Inc (RIG) and GlobalSanteFe Corp (GSF) were some of today's notable downgrades:

• Davenport cut shares of Microsoft (NASDAQ: MSFT) to Neutral from Buy citing concerns of a potential Yahoo! (YHOO) acquisition, which would significantly dilute earnings.

• Gabelli downgraded shares of Career Education (NASDAQ: CECO) to Hold from Buy as the firm believes turnaround efforts at the University segment are not gaining traction.

• Raymond James cut Verizon Communications (NYSE: VZ) to Underperform from Market Perform.

• With the greater dependence on midwater floaters, AG Edwards believes Transocean Inc (NYSE: RIG) now has a more balanced risk/reward and cut shares to Hold from Buy.

• AG Edwards also cut GlobalSanteFe (NYSE: GSF) to Hold from Buy based on the company's greater dependence on international jackups and balanced risk/reward.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded LandAmerica Financial Group, Inc (NYSE: LFG) to Market Perform from Outperform on valuation.

• JP Morgan downgraded Westwood One (NYSE: WON) to Underweight from Neutral.

• Linear Technology Corp (NASDAQ: LLTC) was downgraded to Underweight from Neutral at Prudential.

• Matrix USA downgraded shares of Armor Holdings, Inc (NYSE: AH) to Buy from Strong Buy.

• Matrix downgraded Amazon.com (NASDAQ: AMZN) to Sell from Hold.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).