A pair of oil giants received some positive broker comments this morning. Deutsche Bank upgraded Exxon Mobil Corp. (XOM) from "hold" to "buy" and boosted ConocoPhillips (COP) from "sell" to "hold." Deutsche Bank said XOM has the lowest break-even oil price of its peers, is expected to generate cash returns in 2009 that are around double the industry average, and will be the only oil company to continue buying back stock. It added that credit default swap prices on XOM imply that it is less likely to go bust than the US government.

Meanwhile, Deutsche Bank said that its COP upgrade was based on valuation after the stock hit its $40 price target. However, the upgrade has failed to boost the shares of COP, as the stock was down more than 2% Monday and has shed roughly 24% since the beginning of 2009. In fact, the security tagged a fresh 52-week low of $38.13 in trading today. The equity has been trapped in a downtrend under its ten- and 20-week moving averages since early July, resulting in a loss of more than 58%.

Despite COP's lackluster performance, we continue to see heavy optimism surrounding the stock. During the past ten trading sessions, the International Securities Exchange has reported 3.3 calls purchased to open for every put purchased to open. This put/call ratio is higher than 96% of those taken during the past 52 weeks, pointing to growing optimism among options players.

Digging into the stock's front-month open interest configuration, we find that peak call open interest resides at the out-of-the-money March 50 call, with more than 15,600 contracts. Meanwhile, peak March put open interest sits at the in-the-money 40 strike with fewer than 7,100 contracts. This preference for calls indicates that expectations are riding high for the shares.

Checking in on Wall Street, we find that six of the nine analysts following COP rate it a "buy" or better, according to Zacks. This bullish configuration leaves the shares vulnerable to potential downgrades should the shares continue to underperform.

By Nick Perry of Schaeffer’s Trading Floor Blog