American Axle (NYSE: AXL) closed at $2.01. AXL entered into a waiver and amendment to the company's credit, facility, which provides the company a waiver of its financial covenants through July 30, 2009. AXL options were active on July 29 with 30,608 contracts trading. AXL August 2.5 straddle is priced at 1.40, October 2.5 straddle is priced at $2.35 suggesting large price movement.

Patterson-UTI Energy (NYSE: PTEN) closed at $14.23. PTEN, an operator of 60 drilling rigs, is expected to report Q2 EPS today. PTEN August option implied volatility is at 55, September is at 49; below its 26-week average of 64. PTEN options were active on July 29 with 6,452 contracts, trading according to Track Data.

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

MOST NOTEWORTHY: American Axle, Knight Transportation and Newfield Exploration were today's noteworthy upgrades.

• Citigroup upgraded shares of American Axle and Manufacturing Holdings Inc (NYSE: AXL) to Buy from Hold on valuation following the recent sell-off and recommends switching out of General Motors Corporation (NYSE: GM) and into AXL; the firm downgraded GM to Hold from Buy.
• Wachovia upgraded Knight Transportation Inc (NYSE: KNX) to Outperform from Market Perform as they expect the company to benefit earlier from capacity leaving the TL market.
• KeyBanc raised Newfield Exploration Company (NYSE: NFX) to Buy from Hold based on production growth visibility, Rockies value, and increased estimates.

OTHER UPGRADES:

• LCA Vision Incorporated (NASDAQ: LCAV) was upgraded to Sector Perform from Underperform at RBC Capital.
• Deutsche Bank raised Grupo Aeroportuario del Pacifico SA (NYSE: PAC) to Buy from Hold
Baker Hughes Incorporated (NYSE: BHI) to Buy from Neutral.

MOST NOTEWORTHY: General Motors, Anheuser-Busch and GlaxoSmithKline were today's noteworthy downgrades.

• Citigroup downgraded shares of General Motors Corporation (NYSE: GM) to Hold from Buy to reflect reduced earnings power and cash burn risks and recommends swapping into American Axle & Manufacturing Holdings Inc (NYSE: AXL).
• Deutsche Bank cut Anheuser-Busch Companies Inc (NYSE: BUD) to Hold from Buy on valuation following the recent rally spurred by takeover speculation. The firm believes the reported $65/share cash takeover offer by Inbev requires aggressive cost reduction and could harm the brands.
• Morgan Stanley downgraded shares of GlaxoSmithKline Plc (NYSE: GSK) to Underweight from Equal Weight as they see risk to Street expectations for a U.S. Cervarix approval in 2009.

OTHER DOWNGRADES:

• Wachovia downgraded Old Dominion Freight Line Inc (NASDAQ: ODFL) to Market Perform from Outperform.
• Lehman downgraded Yara International (OTC: YARIY) to Equal Weight from Overweight.
• Goldman downgraded China Mobile Limited (NYSE: CHL) to Sell from Neutral and added shares to the Conviction Sell List.

General Motors (NYSE: GM) shares are falling after the company announced this morning it expects a loss of $1.8 billion from the recently ended strike by American Axle & Manufacturing Holdings Inc. (NYSE: AXL) workers. The company also expects a lost production of an additional 230,000 vehicles in the second quarter. 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 GM.

After hitting a one-year high of $43.20 in October, the stock hit a one-year low of $17.47 in March. This morning, GM opened at $18.31. So far today the stock has hit a low of $17.63 and a high of $18.34. As of 12:10, GM is trading at $17.63, down 80 cents (-4.0%). The chart for GM looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $25 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 an 8.7% return in four months as long as GM is below $25 at September expiration. GM would have to rise by more than 43% before we would start to lose money. Learn more about this type of trade here.

GM hasn't been above $25 since February and has shown resistance around $21 recently. This trade could be risky if the US economy gets back on track, but even if that happens, this position could be protected by resistance GM might find around $23, where it topped out back in late April.

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 GM or AXL.

MAJOR PAPERS:

• General Motors Corporation (NYSE: GM) plants that were idled during the American Axle & Manufacturing Holdings Inc (NYSE: AXL) strike are set to resume production mow that the strike has been settled, the Wall Street Journal reported.

OTHER PAPERS:

• The Telegraph reported that Halliburton Company (NYSE: HAL) is expected to determine this week whether it will make a GBP1.8B counter bid for its British competitor, Expro International Group (OTC: EXPRF).
• The Telegraph also reported that U.K.-based Imperial Tobacco Group Plc (NYSE: ITY) could conduct a GBP5B rights issue this week. The company has suggested that it needs the funds in order to retain its investment-grade credit rating following its acquisition of Altadis.

WEB SITES:

• According to Bloomberg, regulatory filings show that banks such as Citigroup Incorporated (NYSE: C) are failing to acknowledge at $35B of additional writedowns in their income statements.

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

• American Axle & Manufacturing Holdings Inc. (NYSE: AXL) reported a strike-related Q1 loss.
• Arch Coal Inc. (NYSE: ACI) Q1 profit tripled on increased demand and higher prices.
• Boeing Co. (NYSE: BA) posted better-than-expected earnings despite Dreamliner delays.
• Coach Inc. (NYSE: COH) better-than-expected quarter didn't impress Jim Cramer.
• ConocoPhillips (NYSE: COP) reported Q1 earnings and revenue above analysts' forecasts.
• Delta Air Lines Inc. (NYSE: DAL) reported a big loss on a one-time charge and fuel costs.
• Dow Chemical Co. (NYSE: DOW) posted a smaller-than-forecast profit drop and predicted a good Q2.
• EI DuPont de Nemours & Co. (NYSE: DD) Q1 earnings rose 26% but missed expectations.
• Ford Motor Co. (NYSE: F) surprised Wall Street by swinging to a profit in the first quarter.
• Goodyear Tire and Rubber Co. (NYSE: GT) easily surpassed analyst estimates for the first quarter.
• Halliburton Co. (NYSE: HAL) Q1 earnings and revenue rose due to international growth.
• Hershey Co. (NYSE: HSY) profit fell but was in line with analysts' expectations.

MAJOR PAPERS:

• The Wall Street Journal reported that Ford Motor Company (NYSE: F) CEO Alan Mulally isn't done cost-cutting. According to people close to the situation, Mulally is considering more job cuts, selling its Volvo brand and closing the troubled Mercury brand.
• BHP Billiton Limited (NYSE: BHP) CEO Marius Kloppers strongly criticized Rio Tinto Plc (NYSE: RTP) and its CEO yesterday, the Financial Times reported. BHP Billiton has outperformed Rio Tinto in several areas, including share price appreciation and EPS growth, said Kloppers, adding, "On every metric I can envisage they [Rio] have been beaten."

OTHER PAPERS:

• According to the Economic Times, AT&T Inc (NYSE: T) is reportedly in preliminary talks with Malaysia's Maxis Communications about buying its 74% stake in Indian cellular phone company Aircel, sources said.
• The United Auto Workers union has rejected several "generous" benefit and wage proposals, according to American Axle & Manufacturing Holdings Inc (NYSE: AXL). In a statement yesterday, the Detroit News reported that American Axle said while tentative agreements had been reached on several issues, the UAW "repeatedly rejected" other proposals that were "considerably higher than the market rate."

MAJOR PAPERS:

• If Yahoo! Inc (NASDAQ: YHOO) accepts a buyout offer from Microsoft Corporation (NASDAQ: MSFT), it will have to be at the software maker's original offer of $44.6B. Microsoft won't raise the price, the Wall Street Journal reported, and the state of the economy might work in their favor.
• The FAA said that landing gear made by Illinois-based AAR Corporation (NYSE: AIR), and used on hundreds of Boeing Company (NYSE: BA)-built aircraft, includes "unapproved" parts, the Wall Street Journal also reported.
• Lehman Brothers Holdings Inc (NYSE: LEH) is thinking of not allowing its two British subprime mortgage units to provide any new loans. The Financial Times reported that the company may also order the units to put additional pressure on borrowers with a spotty credit history whose mortgages are coming to the end of fixed-rate terms.

OTHER PAPERS:

• According to the Detroit News, people familiar with the matter said that the strike at American Axle & Manufacturing Holdings Inc (NYSE: AXL) could threaten production of General Motors Corporation's (NYSE: GM) Chevrolet Malibu sedan.

TheStreet.com's Jim Cramer says the bad news is relentless, and people are discouraged.

Each day seems to be filled with so much disappointment. The American Axle (NYSE: AXL) (Cramer's Take) strike, for example, has now pretty much shut down General Motors (NYSE: GM) (Cramer's Take), and I see no signs that AXL can defeat the union. Given how heavily dependent the Midwest region is on GM for steady income, this one can only exacerbate the terrible real estate market and hence the terrible mortgage delinquencies that pockmark Indiana, Michigan and Ohio.

Or the loss of the Absolut brand for Fortune Brands (NYSE: FO) (Cramer's Take). Fortune needed to win this one because its home improvement business is falling off a cliff. This was a vain attempt to diversify a division that has always helped the company in tough times.

Or the Vytorin studies, nothing new, as we knew that parts of the medical community doesn't approve of the drug, but the analysts had held out hope and we have and are going to see repeated downgrades of the stock. I am telling subscribers of Action Alerts PLUS that Schering (NYSE: SGP) (Cramer's Take) stock, at $16 -- where it is surely headed -- has now lost more than half its value, which reflects the pulling of the drug. As 50% of the company's earnings are reportedly from the drug, perhaps that's a fitting decline. I think SGP is worth a lot more because of the purchase of Oraganon. I have been very wrong. My solace: So many others have been, too.

MAJOR PAPERS:

• What Countrywide Financial Corporation (NYSE: CFC) knew about its mortgage borrowers, and how it handled that information, is under review by Federal investigators, according to the Wall Street Journal. Some of their findings reveal that Countrywide had questionable information, which it then put together many of those mortgages into securities, and sold them to investors.
• The Air Force's award of a $40B contract for aerial refueling tankers to Northrop Grumman Corporation (NYSE: NOC) and European Aeronautical Defense & Space, will be protested by The Boeing Company (NYSE: BA), reported the Wall Street Journal.
• The Financial Times reported that News Corporation (NYSE: NWS) CEO Rupert Murdoch dashed the hopes of Yahoo! Inc (NASDAQ: YHOO) executives seeking an alternative to Microsoft Corporation's (NASDAQ: MSFT) $40B offer after Murdoch endorsed the view of analysts and investors that it could not match the value offered by Microsoft.

OTHER PAPERS:

• According to General Motors Corporation (NYSE: GM) president and COO Frederick A. Henderson, the New York Times reported that the auto maker will not intervene in the dispute between parts supplier American Axle and Manufacturing Holdings Inc (NYSE: AXL) and the United Auto Workers union. Given that the strike has not yet hurt the company's ability to sell vehicles, Henderson said company officials "just have to keep to our own knitting."

MAJOR PAPERS:

• A potential $90B deal between mining companies Companhia Vale Do Rio Doce (NYSE: RIO) and Xstrata has hit a number of snags that could possibly end talks, reported the Wall Street Journal, including that Xstrata shareholder Glencore International, which has agreements to market a large part of what Xstrata's mines, wants to expand that to include Vale products besides iron ore.
• According to people familiar with the matter, bids for Australian retail-property giant Centro Properties are expected from The Blackstone Group LP (NYSE: BX) and General Electric Company's (NYSE: GE) GE Real Estate, among others, the Wall Street Journal reported.

OTHER PAPERS:

• Montreal-based Gildan Activewear Inc (NYSE: GIL) recently paid $135M for V.I. Prewett & Son, a supplier of private label socks to large retailers such as Wal-Mart Stores Inc (NYSE: WMT). Gildan expects socks to add about $200M in annual revenue, equal to about 20c a share, according to "The New America" column in Investor's Business Daily's.
• A strike at a key auto parts supplier has forced General Motors Corporation (NYSE: GM) to shut down a pickup plant in Pontiac, the Associated Press reported. The plant will stop production today due to the strike against the parts supplier, American Axle and Manufacturing Holdings Inc (NYSE: AXL), over a contract dispute.

MOST NOTEWORTHY: Toll Brothers (TOL), COTT Corp (COT), Tim Hortons (THI) and Linktone (LTON) were today's noteworthy downgrades:

• Banc of America downgraded shares of Toll Brothers (NYSE: TOL) to Sell from Neutral, citing expected deterioration in luxury sales due to mortgage distress in the marketplace.

• COTT Corp (NYSE: COT) was cut to Hold from Buy at Stifel, citing the difficult macro environment and continued profit declines.

• Tim Hortons (NYSE: THI) was downgraded to Neutral from Buy at Goldman, citing valuation, and notes that fundamentals remain favorable.

• Montgomery cut Linktone (NASDAQ: LTON) to Hold from Buy, citing the sudden decline in its wireless VAS revenues following Q2 results...

OTHER DOWNGRADES:

• Banc of America downgraded Hovnanian (NYSE: HOV) and Standard Pacific (NYSE: SPF) to Neutral from Buy.
  

• Merrill Lynch cut AutoNation (NYSE: AN) and American Axle (NYSE: AXL) to Sell from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Kellogg Co (K) and the Auto & Truck Supplier Sector were today's noteworthy downgrades:

• JP Morgan downgraded Kellogg Co (NYSE: K) to Neutral from Outperform, citing reduced earnings growth.

• Baird downgraded the Auto & Truck Supplier Sector to Market Underweight citing valuation and lower estimates; the firm downgraded American Axle & Manufacturing Holdings Inc (NYSE: AXL), Autoliv Inc (NYSE: ALV) and Modine Manufacturing Co (NYSE: MOD) to Underperform from Neutral.

OTHER DOWNGRADES:

• JP Morgan downgraded Juniper Networks Inc (NASDAQ: JNPR) to Market Perform from Outperform with a $22 target, explaining that although Juniper's December quarter showed improved revenue results, earnings guidance was disappointing given investment plans for 2007.

• Sanders Morris downgraded Benihana Inc (NASDAQ: BNHNA) to Buy from Strong Buy with a $38 target, noting that they cannot find enough catalysts that would push shares another 20% in the next six months; however, the firm is still bullish on Benihana's short-term and long-term outlooks.

• Credit Suisse downgraded Office Depot Inc (NYSE: ODP) to Neutral from Outperform, with a $41 target and believes that expectations to be overly optimistic.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).