Sears Holding (NASDAQ: SHLD) closed at $94.94 Wednesday.

SHLD is scheduled to release Q1 results on May 29.

SHLD June call option implied volatility is at 46, puts are at 56. SHLD average option implied volatility over the last 26-weeks average is 46 according to Track Data. SHLD puts are priced higher than calls because SHLD is difficult to borrow.

NASDAQ 100-QQQQ overall implied volatility at 24; 26-week average is 28.

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

Merck (NYSE:MRK) is up over 2% on strong earnings.

Novartis (NYSE:NVS) is up almost 4% on a strong first quarter.

Thornburg Mortgage (NYSE:TMA) is down 12% after defaulting on some bonds.

Sears (NASDAQ:SHLD) is off almost 4% after a credit deal it had with Bank of America (NYSE:BAC) ended.

Douglas A. McIntyre is an editor at 247wallst.com.

Penney (J.C.) (NYSE: JCP) is a little timid right now in the face of the recession. According to this AP piece, CEO Mike Ullman, speaking at an analysts' meeting, is reducing the number of new locations he plans to debut this year -- look for 36 instead of 50. The CEO said that he doesn't like the unpredictability that currently exists in the macroeconomic world.

He's right to be careful. Consumer confidence might head lower from here. And considering that J.C. Penney reported terrible comps for March -- the retailer saw a decline of 12.3% -- now is probably not the time to be in expansion mode. Instead, management needs to figure out how best to connect with the mall traffic. This will necessitate new marketing campaigns that aggressively promote the brand and the shopping experience, and differentiate the chain from competitors such as Sears (NASDAQ: SHLD) and Macy's (NYSE: M). Retailers, in my opinion, often underestimate the value of investing in creative campaigns that focus more on the experience a consumer receives when he or she is in the store rather than the perceived value that a consumer has regarding the inventory portfolio.

In terms of investment potential, J.C. Penney is not a retail company that I'm seriously looking at right now. I'll wait to hear more financial updates from management; it isn't expensive at the moment, and it is certainly eons away from its 52-week high, but I just don't have a good feel for its growth potential yet. Interestingly enough, I wrote about American Eagle Outfitters (NYSE: AEO) the other day, another cheap retail stock; both J.C. Penney and American Eagle Outfitters might be considered similar stories in terms of valuation, but for me, I find American Eagle to be the more attractive candidate from a brand viewpoint and in terms of bouncing back big when the economy improves (that's my current outlook, at least). We'll have to wait and see how this mall story evolves.

Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.

Sears Holdings Corporation (NASDAQ: SHLD) shares are falling today after on news that the Federal Communications has fined the retailer for failing to properly label analog-only televisions in its stores. The televisions were supposed to include a sticker warning customers that the sets would require a special converter when broadcasters switch to digital TV next year. 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 SHLD.

After hitting a one-year high of $195.18 last April, the stock hit a one-year low of $84.72 in January. This morning, SHLD opened at $102.95. So far today the stock has hit a low of $101.81 and a high of $104.03. As of 11:45, SHLD is trading at $103.74, down $1.42 (-1.3%). The chart for SHLD looks bullish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $120 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. For this particular trade, we will make a 9.9% return in five weeks as long as SHLD is below $120 at May expiration. Sears would have to rise by more than 16% before we would start to lose money. Learn more about this type of trade here.

SHLD hasn't been above $120 since November and has shown resistance around $110 recently. This trade could be risky if earnings from other retail companies are a positive surprise, but even if that happens, this position could be protected by resistance SHLD might find at its 200 day moving average, which is currently around $120 and falling.

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 SHLD.

When Edd Lampert merged K-Mart and Sears Roebuck into Sears Holdings Corp. (NASDAQ: SHLD), he probably didn't plan for a complete and unmitigated disaster. But, from all accounts, that is what the company is at this time. Its sales have consistently plummeted for more than just a few quarters now, the competition has killed it. Sears merchandising frankly is really, really bad -- and on and on.

Lampert's grand vision is still alive, but the realities of running a national retailer in an intense environment have not proved easy at all. What's keeping Sears Holding's shares above $100, you say? Check out the company's vast real estate holdings. Don't think for a second that this isn't the reason Sears is majority owned by Lampert, who could care less about the retail end of the business.

Still, you have to run a business. It's always nice to see that a former CEO who appeared to do virtually nothing in terms of performance get an annual base salary of $1 million through the next few years -- even though he's no longer at the company. Ousted CEO Alwyn Lewis, who was highly regarded when recruited for the Sears Holdings CEO spot but who was wholly ineffective, will receive his salary package through March 24 of 2010. Lewis will also continue to have health and welfare plan availability along with having his remaining stock and option awards vest until 2010 as well.

Even though the boards of public companies should be completely separate from the management and owners of the company, it's hard to see that they're not when excessive, after-term packages like this come to light. Pay for performance? Hogwash. CEO compensation committees can be as corrupt on company boards as those Enron folks from years back. Well, to a degree, anyway.

While the sagging dollar and swooning stock market has made me more likely to shop at Sears (NASDAQ: SHLD) than at Nordstrom (NYSE: JWN), I am considering the 10 Things to Add a Glamorous, Global Twist to my looks.

Instead of stories about basketball players dropping $10k for a pair of shoes, Bloomberg is running a story on some short selling going on at Nordstrom.

The upscale retailer has embarked on an aggressive store expansion. The company will add 1.11 million square feet in 2008, more than twice that which was added in 2007. With that expansion in square footage has come an commensurate increase in short sales volume (those sold with the intention of betting on the stock price decreasing in JWN).

Analysts are fearing that while Nordstrom may have it going on in terms of hitting the fashion bulls-eye, such aggressive expansion may negatively affect the company. The same Bloomberg story quotes a Wall Street analyst who said that "slowdown in square-footage growth'' would make her more positive on the Nordstrom story.

Much as an astute investor in the stock market would use price pullbacks to add to positions he or she likes, Nordstrom is leveraging cut-backs in store expansions at competitors to land what it feels are prime locations for new stores.

With fears that the U.S. consumer will suffer more than he is presently, investors are nervous that store expansion may leave Nordstrom with a lot to sell and not a whole lot of buying going on.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

MAJOR PAPERS:

• This year, the International Trade Commission is set to issue rulings on whether Samsung and Nokia Corporation (NYSE: NOK) have infringed patents from InterDigital Inc (NASDAQ: IDCC). If InterDigital, who licenses its patents to iPhone maker Apple Inc (NASDAQ: AAPL), wins, fees from the deals could double its revenue over the next few years, the Wall Street Journal contended.
• The Wall Street Journal also reported that Macy's Inc (NYSE: M) is among the retailers that include The Home Depot Inc (NYSE: HD) and Sears Holdings Corporation (NASDAQ: SHLD) to stop making its monthly disclosure of retail sales.

OTHER PAPERS:

• According to FDA commissioners, the New York Times reported that Baxter International Inc's (NYSE: BAX) critical blood thinner heparin, which has been linked to nearly 20 deaths and whose base was created in China, contained a "possibly counterfeit" ingredient that "mimicked the real drug."
• In his opening arguments in the state of Alaska's lawsuit against Eli Lilly & Company (NYSE: LLY), an attorney for the state alleged the drug maker failed to warn doctors and patients of dangerous side effects associated with its drug Zyprexa, the Associated Press reported.

Shares of department store retailer Sears Holdings Corp. (NASDAQ: SHLD) have moved higher this morning, despite the fact that the company posted a 47.5% decline in fourth-quarter profit, hurt by increased markdowns and weak sales of its products.

The retailer announced that its quarterly profit dropped to $426 million, or $3.17 a share on declining margins as sales at its Kmart and Sears stores slipped due to the weak U.S. economy and increased competition. These numbers are down from $811 million, or $5.27 per share reported in the same period a year ago.

Included in the company's earnings numbers was a one-time gain related to the sale of some assets. Excluding that, Sears earnings numbers would have come at $3.04 per share. Analyst estimates (which typically exclude one time items) was for $3.10 per share in the quarter.

U.S. stock futures were lower this morning, ahead of economic activity data and as Federal Reserve chairman Bernanke testifies before Congress for the second day. Several large-cap companies are also reporting earnings today and could help sway sentiment on the Street.

On Wednesday, stocks finished the session mixed. Concerns about the economy were not easily alleviated by
More economic data will be released today and remain in focus:

• At 8:30 a.m. EST, the latest reading of gross domestic product for the fourth-quarter is due. Analysts are expecting the data to show an annual growth rate of 0.8%, up from the initial estimate of 0.6%.
• At the same time, weekly initial jobless claims will be reported.

TheStreet.com's Jim Cramer says it could be part of a strategy to pounce when the economy sagged. Lowe's can take the pain; Home Depot can't.

Maybe Lowe's (NYSE: LOW) (Cramer's Take) sees what we saw this morning: A Home Depot (NYSE: HD) (Cramer's Take) that's a shadow of its former self. Maybe LOW is pulling a Verizon (NYSE: VZ) (Cramer's Take) and just going out to destroy the competition with lower rates and short-term hits to performance.

Yesterday I was torn between what really drove up the price of Lowe's: the January low point with February showing some improvement, or an overall belief that the early cycle is starting and the economy has bottomed courtesy the Fed rate cuts. The reaction last night to Nordstrom (NYSE: JWN) (Cramer's Take) was similar: terrible earnings but hope that things will get better. It's is now well above where it hit its low and it is hard for me to believe that it could go back there.

You couldn't tell which theory was winning out for either Lowe's or Nordstrom because I am sure you had buyers of both plus the ubiquitous short-sellers who lurk everywhere and are prone to cover on a moment's worth of positive price action (as we saw in Goldman Sachs (NYSE: GS) (Cramer's Take) yesterday before a new round of estimate cuts, courtesy special purpose vehicles that some alleged cognoscenti will claim they saw coming).

Here are a few highlights from this past week's earnings coverage from BloggingStocks:

• Amkor Technology Inc. (NASDAQ: AMKR) easily beat estimates and raised its guidance.
• Crocs Inc. (NASDAQ: CROX) posted solid fourth-quarter results on strong overseas sales.
• DealerTrack Holdings (NASDAQ: TRAK) fourth-quarter revenue rose, but the credit crunch hurt results.
• Garmin Ltd. (NASDAQ: GRMN) fourth-quarter earnings soared on strong holiday sales.
• Gilat Satellite Networks Ltd. (NASDAQ: GILT) posted strong quarterly and full-year results.
• HJ Heinz Co. (NYSE: HNZ) raised its guidance productivity gains and favorable exchange rates.
• JAKKS Pacific Inc. (NASDAQ: JAKK) posted solid results, lifted by Hannah Montana and Disney toys.
• Marvel Entertaiment Inc. (NYSE: MVL) earnings doubled despite investment in films not yet released.
• Newmont Mining Corp. (NYSE: NEM) swung to a fourth-quarter loss despite rising gold prices.
• Safeway Stores Inc. (NYSE: SWY) met fourth-quarter earnings estimates, ending its best year since 2001.
• Wal-Mart Stores Inc. (NYSE: WMT) posted its first $100 billion quarter but lowered its forecast.

Also, Jim Cramer sees Hewlett-Packard as a market bellwether, and Ted Allrich looks at some other bellwether stocks. Sheldon Liber gets a sense of deja vu from Exxon Mobil's (NYSE: XOM) big profits and its tussle with Chavez.

Upcoming results to watch for include Nordstom Inc. (NYSE: JWN), Macy's Inc. (NYSE: M), Washington Post Co. (NYSE: WPO), Dell Inc. (NASDAQ: DELL), Sprint-Nextel Corp. (NYSE: S), and Sears Holdings Corp. (NASDAQ: SHLD).

Visit AOL Money & Finance for more earnings coverage.

Eddie Lambert may have to loan Sears Holdings (NYSE: SHLD) some money. Cash at the company be getting very tight. According to the Wall Street Journal, "some analysts wonder whether falling sales, slimmer profit margins and other woes are causing cash flows to decline to a level that could hinder a turnaround."

The last cash balance that Sears announced was lower than most analysts expected. If the company needs to spend money to improve its stores or increase inventory in products it thinks will sell well, it could draw down the cash level even further.

For Lampert, the bad news keeps getting worse. Sears stock has staged a mini-rally over the last two weeks, moving from below $85 to $103. News about cash problems could push the shares back down.

Lampert made the classic error of thinking that with Sears and K-Mart 1+1=3. In reality, he took two weak companies and saved some money in a merger. The problem was that the companies got even weaker.

Who says that hedge fund managers don't make good corporate chiefs?

Douglas A. McIntyre is an editor at 247wallst.com.

MOST NOTEWORTHY: The Retailing Broadline Sector, Mips Technologies and Alliance Data were today's noteworthy upgrades:

• Deutsche Bank upgraded the Retailing Broadline Sector to Neutral from Cautious and believes the worst is over for the retailing sector. The firm recommends long Buy rated CVS Caremark (NYSE:CVS) and Wal-Mart Stores (NYSE:WMT) vs. short Sell rated Sears Holding (NASDAQ:SHLD).
  
• B. Riley upgraded shares of Mips Technologies (NASDAQ:MIPS) to Buy from Neutral on valuation, as they find the risk/reward attractive at current levels.
  
• Alliance Data (NYSE:ADS) was raised to Outperform from Market Perform at JMP Securities following its strong Q4 report and guidance.

OTHER UPGRADES:

• Roche (RHHBY) was raised to Overweight from Neutral at HSBC.
  
• Bear upgraded Nordstrom (NYSE:JWN) to Outperform from Peer Perform.
  
• Wachovia raised Gilead Sciences (NYSE:GILD) to Outperform from Market Perform.

In the past couple days, there have been two indications that Sears Holdings (NYSE: SHLD) chairman Eddie Lampert realizes that his strategy to turnaround the company is failing, or at least flailing. First, CEO Aylwin Lewis resigned with the treads of Lampert's shoes implanted firmly on his backside.

Now, Lampert is giving up his own role in the day-to-day operations of the company, a sign that he is now aware of what most people have been aware of for a long time -- what the New York Times calls his "prickly personality and a hands-on management style" are not good for the company, especially given his utter lack of retail experience.

But the problem for Sears is two-fold: First, any real turnaround for the retail operations will require Lampert to loosen the purse-strings. Secondly, Sears needs better managerial talent.

As Herb Greenberg pointed out yesterday, "Lewis is being replaced by Bruce Johnson, who is head of the company's supply chain and operations. That Lewis is being replaced, even on a temporary basis, by someone with a background in supply management, and not a merchant, shows how shallow the depths are within Sears of true merchants/retailers."

Perhaps Lampert's decision to step aside from the management of the company will help lure in elite retail executives. Lewis's departure and Lampert's reduced role have to be seen as big positive for for Sears shareholders. Now all they need is for Lampert to spend the money to modernize an aging store base.

MAJOR PAPERS:

• The Wall Street Journal reported that IAC/InterActiveCorp's (NASDAQ: IACI) CEO Barry Diller is in talks with outside investors or possible buyers for all four companies that he plans to spin off, according to a person familiar with the situation.

OTHER PAPERS:

• Biogen Idec Corporation (NASDAQ: BIIB) may be considering an offer for Genmab (OTC: GNMSF), according to the UK Times; GlaxoSmithKline Plc (NYSE: GSK), which has a license for Genmab's HuMax, may have to counterbid in order to protect its position.
• The Economic Times reported that Sears Holdings Corporation (NASDAQ: SHLD) may be interested in launching operations in India.

WEB SITES:

• According to a source close to Yahoo! Inc (NASDAQ: YHOO), CEO Jerry Yang has decided to go forward with layoffs at the company. The source said that the layoffs will come in the 1,500-2,000 range instead of the "hundreds" reported elsewhere, the Silicon Alley Insider reported.