Analyst upgrades:

• Baird upgraded Starwood Hotels (NYSE: HOT), Host Hotels (NYSE: HST) and Marriott (NYSE: MAR) to Outperform from Neutral based on valuation and indications that negative sentiment has reached a bottom.
• Citigroup upgraded Torchmark (NYSE: TMK) to Buy from Hold as they find the valuation attractive and think management can grow earnings and book value in 2009/2010. Despite upgrading, the firm lowered their target price to $37 from $45.
• ASM International (NASDAQ: ASMI) was added to Goldman's Conviction Buy List.
• Credit Suisse (NYSE: CS) was raised to Overweight from Equal Weight at Morgan Stanley.
• Live Nation (NYSE: LYV) was upgraded at Natixis to Buy from Hold.

Chesapeake Energy (NYSE-CHK), a producer of natural gas, is recently trading at $18.25 in pre-open trading, above its close of $16.52. Mcclendon Aubrey Kerr, Chairman of CHK, sold 31,522,923 shares at $18.06 for $569,326,055 from October 8 to October 10. CHK will host an analyst meeting on October 15. CHK's Natural Gas futures are recently up 1.90% to $6.659 according to Bloomberg. CHK November option implied volatility of 198 is above its 26-week average of 57 according to Track Data, suggesting larger price movement.

Lloyds TSB Group (NYSE-LYG), Royal Bank of Scotland Group Plc (NYSE-RBS) and HBOS Plc will get a $64 billion bailout from the U.K. government. LYG over all option implied volatility of 111 according to Track Data, suggesting large price movement.

Banco Santander (NYSE-STD) closed at $12.34. STD confirmed it's in talks to acquire full control of Sovereign - (NYSE-SOV). STD has a 24.9% stake in SOV and three seats on the board. STD November option implied volatility of 104 is above its 26-week average of 43, suggesting larger price movement.

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