SunPower (NASDAQ: SPWR - option chain) shares are soaring higher today after Pacific Gas and Electric Co. said it has chosen SPWR to supply up to 800 megawatts of renewable energy. On the news, an analyst at Merrill Lynch also upgraded SPWR to "Buy" from "Hold." If you think that the stock 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 SPWR.

SPWR opened this morning at $87.64. So far today the stock has hit a low of $87.57 and a high of $93.93. As of 12:55, SPWR is trading at $93.26, up $14.69 (18.7%). The chart for SPWR looks neutral and S&P gives SPWR a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $55 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 willstill leverage nice returns. For this particular trade, we will make an 11.1% return in just four months as long as SPWR is above $55 at December expiration. Sunpower would have to fall by more than 40% before we would start to lose money. Learn more about this type of trade here.

SPWR hasn't been below $55 since March and has shown support around $71 recently. With the way the political climate is shaping up, it looks like some form of solar power should be here for quite a while.

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 SPWR.

Solar energy may be the wave of energy's future, but companies such as Google (NASDAQ: GOOG) and Chevron (NYSE: CVX) may best start-ups in getting to the benefits. A number of large American companies with tremendous balance sheets are pouring money into solar energy based on the fact that it is becoming more competitive with oil.

According to Bloomberg, "Costs for the technology will fall below coal as soon as 2020, the U.S. government estimates. JPMorgan Chase & Co. and Wells Fargo & Co. invested last year in the biggest solar plant built in a generation; Chevron and Google are funding research; and Goldman Sachs is seeking land to lease as demand out-paces wind turbines and geothermal."

Given the potential size of the bonanza, the investments should not be surprising, but they could squeeze smaller solar energy companies out of the market. Firms like JA Solar (NASDAQ: JASO) and SunTech (NYSE: STP) have their entire futures bet on the success of solar energy and the fact that there are not many companies in the business, at least until now.

It has began to occur to large companies that if fossil fuels will indeed start to run low in two or three decades that the trillions of dollars in market cap currently represented in large oil company stocks will have to go somewhere.

Why not to Google?

There are many that fear the bear hasn't died. Maybe he's hibernating. But if the bear isn't gone, he's at least lost some teeth. In the last hour of trading today, the DJIA was up more than 900 points from its intraday lows seen just last Monday. Despite weaker home prices trends not seen for 20 years and despite an absolutely dismal ugly Consumer Confidence report, the market managed to do well today despite mixed index averages at the closing bell. There was not a single earnings report that can be used for "the focus" that turned the whole market. It looks like there was actually real buying interest coupled by short covering. Here are the unofficial closing bell index averages for today:

• DJIA 12,532.60 (-16.04; -0.13%)
• S&P500 1,352.99 (+3.11; +0.23%)
• NASDAQ 2,341.05 (+14.30; +0.61%)
• 10YR-TBond 3.492% (-0.03)

Monsanto (NYSE: MON) rose almost 10% to $114.54 after the agriculture giant raised guidance for both Q2 and for fiscal 2008 based on strong seed sales and all other markets firing on all cylinders.

According to the FT, GE (NYSE: GE) "will announce plans to double its investments in renewable energies to $6bn by 2010."

GE is, of course, smart to put its capital into a necessary hedge against crude oil and gas. Most evidence points to the fact that high prices in this sector will make alternative energies more practical and profitable.

But GE's plan has some drawbacks. The first is that the market for new energy sources will be very crowded. Many of the companies are small. That does not play to GE's strength of being in very large, capital-intensive businesses like jet engines and infrastructure. The capital that makes GE such a winner in its current businesses may not be as important in an emerging industry with hundreds of start-ups.

GE also is entering a business that depends to a great degree on government regulation and tax breaks. In many countries, alternative energy growth is based on incentives granted through taxation or contracts for local projects. That can be fickle. GE may not do fickle well.

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

Solar energy products company Trina Solar Limited (NYSE: TSL) released very bright 3Q 2007 results on November 21. The company has been named #1 on Deloitte Technology China Fast 50. Trina Solar posted a total revenue increase of 9.7% to $82.6 million. Gross profit increased 16.7% and total megawatt shipments increased 4%. YTD, the numbers are impressive. Total revenues are up 164%, gross profit is up 92%, operating income is up 76% and net income is up 145%.

These numbers, however, must be tempered with the realization that trina Solar is still very much in its early stages of growth and most of its free cash flowe must be plowed back into the company to increase manufacturing capacity. Operating income dipped 14% in 3Q 2007, cost of revenues increased 8%, interest expense increased, as did operating expenses, administrative expenses, selling expenses and the R & D budget.

Currently, Trina Solar has a manufacturing capacity of 150 MW (megawatts) of solar modules, but plans to double the size of the company to 350 MW by the end of 2008. Trina Solar has already locked in contracts for much of its polysilicon supplies through 2013, and has already sold 100% of its first module production capacity in 2008 and 50% of its second module production capacity.

Trina Solar is in the initial stages of planning for its own $1 billion polysilicon production facility to supply its raw material needs in a cost effective manner. In addition to its existing client base in Germany, Italy and Spain, with its increased production capacity, Trina Solar is looking to expand its market base into the Netherlands, Belgium and France in 2008.

NutriSystem (NASDAQ: NTRI), a weight management and fitness products and services company, is recently down $10.57 to $37 in pre-open trading, some 22%.

• NTRI announced disappointing third quarter results.
  
• Thomas Weisel says: "3Q fundamentals crumble; we expect challenges into FY08."
  
• NTRI overall option implied volatility of 59 is above its 26-week average of 47 according to Track Data, suggesting larger price risk.

LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers.

• LDK shares were weak on 10/3 on allegations of inconsistency in inventory reporting.
  
• LDK says: "LDK's management team and board of directors formed an internal committee to investigate the allegations and conduct an immediate physical inventory of LDK's polysilicon materials. The management team found no material discrepancies."
  
• LDK October option implied volatility of 131 is above its 12-week average of 69 according to Track Data, suggesting larger risk.

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

LDK Solar (NYSE: LDK), a manufacturer of multicrystalline solar wafers, was sold off down $16.65 to $51.65. Piper Jaffray said "We have confirmed that the LDK financial controller recently left the company." LDK October option implied volatility of 133 was above its 12-week average of 69 according to Track Data, suggesting larger risk.

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

Hoku Scientific Inc (NASDAQ: HOKU) subsidiary, Hoku Materials, just signed a pact with SunTech Power Holdings Co Ltd (NYSE: STP) wherein Hoku will sell and deliver polysilicon to Suntech beginning in mid-2009. The deal, which was announced yesterday after the markets closed, has sent the stock skyrocketing up nearly 60% to $7.97 in after-hours trading. SunTech closed yesterday at $32.28 and later gained 9c in the extended trading. Shares of Hoku and SunTech are currently trading up $7.38, or up 60.65%, and at $33.00, or up 2.11%, respectively.

The $678M agreement, which has a 10-year term and also allows either company to opt out of the last two years, provides for the delivery of polysilicon, used to make solar energy panels, at set prices. This deal follows an agreement in January between Hoku and Sanyo Electric Co Ltd (OTC: SANYY) that may bring an additional $370M in payments to the materials science company.

Hoku is currently in the process of building a $220M polysilicon production plant in Idaho in order to transition further into the solar industry. The plant will produce polysilicon for its own solar panel business, creating 200 jobs in the process, and will offer excess supply to the semiconductor market.

Analysts at investment bank Thomas Weisel believe this could be a good deal for Hoku, particularly amid its transition into the solar industry. The firm, however, is still concerned about Hoku's ability to raise $150M in debt financing, which it is seeking for the plant. Hoku believes it is currently on track with the plant, but if the company is unsuccessful in building the polysilicon plant or if it does not meet certain milestones with its products, the initial direct deposit must be returned to SunTech.

Aleo Solar (Other OTC: AEORF) has negotiated a distribution deal with German thin-film solar module manufacturer Johanna Solar Technology. The five year agreement gives Aleo distribution rights for up to 80% of Johanna's thin-film solar modules. Aleo is widely recognized and well established in the manufacturing and marketing of solar technology.

Jeroen Haberland, executive director of Johanna Solar Technology, indicates confidence in Aleo Solar's marketing capabilities as the two companies set the stage for debut of Johanna's thin-film technology at the 22nd European Photovoltaic Solar Energy Conference in Italy this September. Haberland stated, "We are glad to have in Aleo Solar a long-established company on our side."

Aleo Solar has been growing steadily in both Germany and Spain with indications being that the company is proving itself by stepping outside the boundaries of their subsidized German environment. This gives credence to the idea that solar technologies are forcefully coming into their own age and that solar energy will continue to develop as a workable and profitable energy provision solution. Just this past May, Aleo announced the opening of a new production facility near Barcelona Spain by its subsidiary, Aleo Solar España. In 2006, Aleo was responsible for providing and assisting in the installation of 64 megawatts of solar electrical generation capacity in Spain.

It took a couple of days but it seems that today the market has finally started to digest the supreme court ruling that greenhouse gases appearing to fall under the Clean Air Act. While most in Wall Street were first concerned about the adverse ramifications this ruling could have on energy stocks, slowly, its positive impact on alternative energy companies became apparent.

True, no regulatory action has been taken yet, but the ruling, combined with recent Green trends point to that direction and solar energy stocks stand to gain from. Today, indeed, many solar energy stocks are rising 2.5-5% (3:30 p.m.). Specifically, SunPower Corp. (NASDAQ: SPWR) is up 5.01% to $49.49, Evergreen Solar, Inc. (NASDAQ: ESLR) is up 4.71% to $10.67 and Trina Solar Ltd. (NYSE: TSL) is up 4.32% to $49.24.

Eric Buscemi thinks SunPower could be a great bargain buy, despite its silicon supply problems.
Last week, I wrote extensively on Trina and Suntech Power Holdings Co., Ltd. (NYSE: STP). While Trina has been phenomenal since its IPO in late December, there could still be some juice left in it. STP, up 2.72% to $35.94 today, is more solid and less volatile, but could still give great returns. Investors prefer SunPower over Suntech at the moment though.

As you can see in the chart, JA Solar Holdings ADS (NASDAQ: JASO), First Solar Inc. (NASDAQ: FSLR) and Solarfun Power Holdings Co., Ltd. (NASDAQ: SOLF) shares also performed well today gaining 3.09%, 2.69% and 0.97% respectively.