Eldorado Gold (AMEX: EGO - option chain) shares are rising today as gold futures have tagged another record intra-day high today. The front-month October gold contract is currently at 1,060, but was as high as 1,068 earlier this morning. 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 EGO.

EGO opened this morning at $12.48. So far today the stock has hit a low of $12.13 and a high of $12.48. As of 12:00, EGO is trading at $12.53 up 46 cents (3.8%). The chart for EGO looks bullish.

Last year when crude oil prices rose to $147.00 per barrel, many homeowners and businesses converted from oil to natural gas.

On Wednesday, U.S. gas futures fell to $3.049 per mBtu, the lowest in seven years, as the market remains oversupplied.

Now enters a large unknown hedge fund that spent millions buying $10.00 January and February call options. The options give buyers the right to purchase natural gas at $10.00 per million BTUs.

First of all, let's look at what hedging really is. Take, for example, a farmer who grows corn. He knows that his cost for growing corn is, say, $3.00 per bushel. But he doesn't know what price the price of bushel of corn will be come harvest time. He looks at the September futures contract for corn and sees that the price is $3.30 per bushel.

To guarantee that he will get $3.30 at harvest time, he sells September corn contracts equal to his crop (each corn contract equals 5,000 bushels). When harvest time comes he delivers his corn to the appropriate delivery point designated by the Chicago Board of Trade exchange (CBOT) where the contracts are traded. It should be noted that if the price of the futures contract goes above $3.30 per bushel, the farmer may be called for margin money until he makes delivery, at which time his account is settled out.

TheStreet.com's Jim Cramer got his hands on the strategy to stop the regulation once and for all.

Lucky readers, the companion to the left of me last night at dinner mistakenly -- and I do believe it was by mistake and that he isn't a fifth columnist -- left a memo addressed to "Fellow Futures Traders." It was the battle plan, the battle plan to stop the regulation, and I am printing it here for all to see.

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Dear Fellow Futures Traders:

Today we find ourselves under assault by a son of Illinois, the great capital of futures, and his chief of staff who has always done our bidding.

Yamana Gold (NYSE: AUY - option chain) stock is falling today as gold futures are retreating from recent highs. Last week, front-month gold was approaching $1,000 quickly, but on Friday dropped 3% and today gold is down another 1.5% so far to trade below $950. 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 AUY.

This morning, AUY opened at $10.31. So far today the stock has hit a low of $10.17 and a high of $10.45. As of 12:35, AUY is trading at $10.39, down 26 cents(-2.4%). The chart for AUY looks bullish.

TheStreet.com's Jim Cramer says the hubbub is caused by people who can't resist looking for an edge.

Here we go again with the meaninglessness of the futures. Looking down last night, off of what, Asia? Looking up today off of what, Asia? Every night and morning bad bets are made at the opening of trading by hedge fund managers trying to find an unfindable edge.

To me this nonsense is part and parcel with what I call the "new" market filled with players who try to react -- not anticipate, but react -- to nonexistent events, trying to get "positioned" for the day.

Chevron (NYSE: CVX - option chain) stock is falling today after the company warned Thursday after market close that its first-quarter earnings will be lower than previous quarters, due to a weaker dollar and lower oil prices during the period. CVX reports earnings on May 1. Also, not helping are crude oil futures, which are sliding by more than 5% on the session after the International Energy Agency forecast slowing demand. 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 CVX.

This morning, CVX opened at $67.45. So far today the stock has hit a low of $66.52 and a high of $67.74. As of 11:40, CVX is trading at $67.17, down $2.06 (-3.0%). The chart for CVX looks bullish and S&P gives CVX a positive 5 STARS (out of 5) strong buy ranking.

Has oil bottomed? It may have, if one-year futures contracts are any indicator.

The one-year futures curve for oil -- contracts that price oil to be delivered in December -- traded at $60.10 per barrel Monday, a price that's 28% higher than the current price, Bloomberg News reported Monday. Oil fell 44 cents early Monday to $45.90 per barrel.

Energy Trader Jim Dietz told BloggingStocks several factor are at play in the one-year oil futures price.

"First, you have a really beaten-down commodity, strange as that may seem to say about oil, but it really has taken a beating, down more than $100 in the past year. So you have some traders positioning themselves on the low price. Second, some buyers of oil are hedging their cost, arguing $60 in a year would be a pretty good price to lock in for a cost," Dietz said. "Then, you have other traders arguing the U.S. economic recovery will start by late 2009, which should boost demand, and oil's price." Dietz added that he was currently flat, or had no open energy trading positions.

TheStreet.com's Jim Cramer says that bid has kept a floor under equities, but things are dire without it.

Without the futures ramping, don't things seem so expensive? Those consumer nondurables -- uh-oh, they have dollar pressure. The stimulus package of China? Is that why we bought Fluor (NYSE: FLR) (Cramer's Take)? Where are the orders? All those oil stocks looked so inexpensive with oil at $66 going to $70. But we just paid $2.25 at the pump with no line and the futures are at $60. Citigroup (NYSE: C) (Cramer's Take) hit a 52-week low despite talking about an acquisition, and Bank of America (NYSE: BAC) (Cramer's Take) is a smidge above the 52-week low. What happens if it takes it out? What happens if Google (NASDAQ: GOOG) (Cramer's Take) takes out $300? Where is the Nasdaq bid, for heaven's sake? Where did all of those morning buyers go who kept coming back right until the end?

And that's the problem, isn't it? The collective cheapness of equities vs. the overvaluation of stocks. We simply don't get an opportunity to do anything but lose less than the other guy, and we are supposed to like it because stocks only get this inexpensive once or twice in a lifetime.

Stock futures in the U.S. are up this morning, indicating a potentially strong opening for the financial markets.

While volatility is likely to remain high, positive futures suggest that the co-ordinated rate cuts by central banks are having the intended effect. European markets have moved higher, with the FTSE 100 and DAX up over 1%.

Markets may also be buoyed by reports that the U.S. Treasury is considering taking an ownership stake in major banks. This follows the announcement of a similar plan in Great Britain. The plan, which amounts to a partial (and voluntary) nationalization of the banks, seems to be generating more enthusiasm and confidence than the vague $700 billion bailout already approved by Congress.

Additional positive news came from International Business Machines (NYSE: IBM), which released preliminary third quarter results above analyst estimates. The stock is up 4.6% to $94.76 in pre-market trading. Sales were down, but the company showed impressive results nonetheless, suggesting that other large tech firms may be able to weather the global slowdown.

Analysts will be focused on weekly jobless claims and August wholesale inventory reports for further clues about the state of the economy. The end of the ban on short selling may act as another market catalyst.

LDK Solar (NYSE: LDK - option chain) shares are falling today despite the company's announcement of an eight-year contract with Japan's Sumitomo Corp. to supply solar cell parts. Under the deal, LDK will supply about 750 megawatts of multicrystalline silicon wafers to Sumitomo. However, most solar stocks are dropping today as crude oil futures are lower again at $106, and almost dipped below $105 earlier this morning. 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 LDK.

This morning, LDK opened at $45.57. So far today the stock has hit a low of $41.70 and a high of $45.57. As of 12:20, LDK is trading at $43.20, down $2.78 (-6.0%). The chart for LDK looks neutral and S&P gives LDK a neutral 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $60 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 4.2% return in 6 weeks as long as LDK is below $60 at October expiration. LDK would have to rise by more than 38% before we would start to lose money. Learn more about this type of trade here.

BIG hasn't been above $35 at all inthe past year and has shown resistance around $34.90 recently.

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 LDK.

Add another case study to the controversy over speculators and market manipulation.

The Commodity Futures Trading Commission is investigating whether cotton prices were 'artificially inflated' in early March, The Wall Street Journal reported Wednesday (subscription required). The March 4 price spiked from about 70 cents per pound to an intra-day high of $1.09 and closed at 93.1 cents.

In Wednesday morning trading, cotton rose about four-tenths of one cent to 70.070 cents per pound.

The Journal reported that the price spike in early March was unusual and baffled traders because cotton inventories were at their highest level in four decades, towel and fabric demand was weakened by the housing slump, and global supplies were high.

On the other side of argument, one which argues that market forces set the price, some cotton merchants themselves were trading aggressively; a little-used exchange rule suddenly required merchants to unwind sell orders; and financial investors, including pension and hedge funds, started to enter the market, which generated an eight-fold jump February 19-26 in net buying, The Journal reported, citing CFTC data.

Continental Airlines (NYSE: CAL) shares are trading higher today as oil futures are falling now that Hurricane Dolly looks like it will not hit key oil installations in the U.S. Gulf of Mexico. The recent slide in oil prices has been good news for most airline stocks, which were battered as investors acted like there was no stopping the rise in oil. 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 CAL.

After hitting a one-year high of $37.79 in October, the stock hit a one-year low of $5.91 in July. CAL opened this morning at $13.46. So far today the stock has hit a low of $12.90 and a high of $15.20. As of 12:50, CAL is trading at $13.84, up $0.48 (4.4%). The chart for CAL looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $5 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 a 19.0% return in just five months as long as CAL is above $5 at December expiration. Continental would have to fall by more than 64% before we would start to lose money. Learn more about this type of trade here.

ExxonMobil (NYSE: XOM) shares are falling today, pulled down by declining oil futures following a report the US supplies rose unexpectedly. 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 XOM.

After hitting a one-year high of $96.12 in May, the stock hit a one-year low of $77.55 in January. This morning, XOM opened at $81.99. So far today the stock has hit a low of $79.41 and a high of $81.99. As of 2:10, XOM is trading at $80.07, down $2.12 (-2.6%). The chart for XOM looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an August 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. For this particular trade, we will make a 5.3% return in one month as long as XOM is below $90 at August expiration. ExxonMobil would have to rise by more than 12% before we would start to lose money.

XOM hasn't been above $90 since late May and has shown resistance around $89 recently. This trade could be risky if the price of oil is driven back up soon, but even if that happens, this position could be protected by resistance XOM might find at its 200 day moving average, which is currently around $89 and falling.

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

Chesapeake Energy (NYSE: CHK) shares are trading higher today as crude oil futures have set another record high on continued tension in Iran and Nigeria as well as the weakening dollar. Natural gas futures are also rising with oil. 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 CHK.

After hitting a one-year low of $31.38 in August, the stock hit a one-year high of $74.00 last week. CHK opened this morning at $63.48. So far today the stock has hit a low of $63.19 and a high of $65.97. As of 12:15, CHK is trading at $63.77, up $2.19 (3.5%). The chart for CHK looks bullish but deteriorating slightly, 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 an August bull-put credit spread below the $50 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 five weeks as long as CHK is above $50 at August expiration. Chesapeake would have to fall by more than 21% before we would start to lose money. Learn more about this type of trade here.

CHK hasn't been below $50 since April and has shown support around $55 recently. This trade could be risky if the price of oil moderates, but even if that happens, this position could be protected by the support the stock might find around $50 where it bottomed in early June.

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 CHK.