Yesterday I speculated that McCain picked Sarah Palin as his VP over the objections of his advisers. I thought that McCain -- who prides himself on fighting corruption in politics -- somehow saw himself in her. But both politicians have experience with the very thing they pride themselves on fighting.

In the case of McCain, his efforts to rid politics of the corrupting influence of corporate money followed his protection of Charles Keating who was securing a real estate deal for his wife, Cindy. The bankruptcy of Keating's S&L cost taxpayers $3.4 billion. More recently former McCain Finance Chair Tom Loeffler, a lobbyist for French company EADS, parent of Airbus, helped it and Northrop Grumman (NYSE: NOC) to prevail in a $35 billion competition for airborne refueling Tankers in February over Boeing Inc. (NYSE: BA) before the General Accounting Office (GAO) concluded that the process was flawed.

Alaska's governor, Sarah Palin, knows a thing or two about lobbyists. The New York Times reveals that she won that post after taking on bribery charges from the oil industry against politicians -- her attack against such corrupting influences helped her prevail over former Alaska governor, Frank Murkowski. That's why it came as a surprise to learn that as governor Palin employed a lobbyist for an energy company for which she procured $500 million in state subsidies so it could build a gas pipeline.

Reuters reports that Boeing Inc. (NYSE: BA) is signaling that it may not submit a bid for the $35 billion Air Force contract for Tankers -- airborne refueling vehicles. Is Boeing serious about not submitting a bid or is it using its leverage to get the Air Force to revise the bidding process to create a more level playing field?

The tanker contract has a long history. The Air Force awarded it this February to EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC). Boeing protested the award citing errors in the way the process was run. The General Accounting Office (GAO) sided with Boeing. And the Air Force announced that it would rebid the contract. But many thought that the rebidding process favored the French company.

Now Boeing is considering not submitting a bid. If Boeing ends up not bidding, it will be an embarrassment for the Air Force, which was bending over backwards to change the specifications to keep Airbus and Northrop in the process so there would be two bidders. Or it might have been to satisfy Thomas Loeffler, an EADS lobbyist who headed up John McCain's finance committee. Regardless of why it was done, if Boeing doesn't bid, the Air Force will be in a tight spot.

The New York Times reports that one reason Boeing Co. (NYSE: BA) may have lost the $100 billion contract to build tankers -- in-flight refueling aircraft -- for the Air Force because the winners -- Boeing's arch-rival, EADS, parent of Toulouse, France-based Airbus and Northrop Grumman (NYSE: NOC) -- took a big risk to demonstrate their commitment to the project.

Specifically, EADS/Northrop made a $100 million bet -- by building a state-of-the-art refueling boom that would funnel the fuel from the tanker to the fighter aircraft in the air -- with no assurance that it would win the contract. Meanwhile, analyst Loren Thompson said that Boeing seemed arrogant and offered a plan that Air Force officials thought would deliver only 19 tankers by 2013 compared with 49 by EADS/Northrop. Thompson even accused Boeing of being unresponsive and impolite.

Much remains up in the air. EADS/Northrop claims its tanker can carry more fuel than Boeing's modified Boeing 767. EADS/Northrop believes its bid also offered more flexibility for carrying cargo, transporting troops, airlifting refugees and delivering humanitarian aid. And there's a dispute about how many U.S. jobs will be created by each. Boeing said its bid would create or support 44,000 American jobs. EADS/Northrop's figure was 25,000 jobs in 49 states.

Boeing may decide to appeal this contract award. Then the General Accounting Office (GAO) will have 100 days to rule on the appeal. Meanwhile, the Air Force claims it bought the better plane.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned and is working on a book on Boeing.

Boeing Co. (NYSE: BA) stock is falling this morning after the company lost a $35 billion contract which was awarded by the U.S. Air Force to two of its rivals. Under the contract, European Aeronautic Defense and Space Co. and Northrop Grumman (NYSE: NOC) will build as many as 179 KC-45A refueling tankers for the Air Force. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BA.

BA hit its 52 week high of 107.83 in July and set its 52 week low of 74.12 in January. This morning, BA opened at $79.32. So far today the stock has hit a low of $79.25 and a high of $80.89. As of 12:35, BA is trading at $80.34, down $2.45 (-3.0%). The chart for BA looks neutral and improving while S&P gives BA a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $90 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 7.5% return in one and a half months as long as BA is below $90 at April expiration. Boeing would have to rise by more than 12% before we would start to lose money.

BA hasn't been above $90 since December and has shown resistance around $85 recently. This trade could be risky if the economy bounces back strongly, but even if that happens, this position could be protected by the resistance BA should find around $85.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in BA.

Lockheed Martin Corporation (NYSE: LMT) shares are trading higher today after competitors Northrop Grumman (NYSE: NOC) and General Dynamics (NYSE: GD) both posted positive earnings reports today, in the wake of LMT's positive release yesterday. Additionally, Lockheed announced today that the company was awarded a $52.5 million contract to provide next generation convoy trainers to the US Marines. 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 LMT.

Lockheed stock has shot up over the past three months, hitting a one-year high of $113.74 earlier this month. LMT opened this morning at $106.16. So far today the stock has hit a low of $106.15 and a high of $108.90. As of 11:05, LMT is trading at $108.70, up $1.73 (1.6%). The chart for LMT 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 $90 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 an 8.7% return in just 3 months as long as LMT is above $90 at January expiration. Lockheed would have to fall by more than 17% before we would start to lose money.

MAJOR PAPERS:

• Barron's (subscription required) "Weekday Trader" advises avoiding Boston Scientific Corporation (NYSE: BSX) despite its recent rally.
• Barron's "Weekday Trader Extra" reported that the Bain Capital Partners and Thomas H. Lee Partners increased $39 a share offer for Clear Channel Communications Inc (NYSE: CCU) is not guaranteed to succeed, with Barron's saying $42 a share or higher likely would.
• Lockheed Martin Corporation (NYSE: LMT) and Northrop Grumman Corporation (NYSE: NOC) said that parts of the Coast Guard's "Deepwater" modernization program are under investigation by the Justice Department, reported the Wall Street Journal (subscription required).
• According to the Financial Times (subscription required), citing a comprehensive independent study from IHS, Iraq may hold twice as much oil in its reserves as previously thought.

OTHER PAPERS:

• The Business reported that Barclays plc ADS (NYSE: BCS) may have identified several ways of offering a higher price for ABN Amro Holdings (NYSE: ABN), the Dutch bank it is trying to acquire, according to sources.
• The National Security Council, or NSC, has called for "special scrutiny" of VodafoneGroup plc ADS's (NYSE: VOD) takeover of Hutch-Essar, which may further delay the deal, reported the Economic Times.

WEBSITES:

• Macrumors.com reported, citing Reuters, that AT&T Inc (NYSE: T) COO Randall Stephenson said the Apple Inc (NASDAQ: AAPL) iPhone is on target for a late June launch.