Because, given the recent stock run-up and volatility, or if the oil price cracks, the stock could be in the $20's by that time and $1.25 ain't much of a premium to capture on a stock like this. Very dangerous trade.
I don't see the danger. You have a stock pumping 17-18 million barrels of oil a day. 2011 exit rate should be closer to 25 million given expected production contributions from the Eagle Ford and Granite Wash.
So with 17-18 million barrels, at today's prices you're earning almost $1 billion just from the current oil production. By end of year, that figure is 50% greater.
This analysis omits any proceeds from Deepwater (which will be billions, probably 2, possibly 3) and any nat gas production, which on a BOE basis, could add another 20 million barrels annually by end of year.
But just on today's forward earnings, this stock is trade for around 6X earnings. Unless oil drops $20, I don't see the downside risk you do and see plenty of upside potential.
I agree there is plenty of upside. That's why I'm long. But I also know the downside and trying to capture a $1.25 premium on such a volatile stock with both good upside but also real downside makes no sense.