Pequot Capital Management is coming to an end, closing the book on two decades of hedge fund history. Arthur Samberg, at one point the biggest hedge fund manager in the world, is closing the company as a result of a Securities and Exchange Commission (SEC) insider trading investigation.

At its peak in 2001, Pequot had $15 million in assets under management. By November 2008, it was only $4.3 billion ... and $3.47 billion as of May 15, 2009, according to a regulatory filing.

San Jose-based SunPower Corporation (NASDAQ: SPWRA) is scheduled to report its first-quarter earnings after the market closes this Thursday, April 23. Thomson First Call notes that analysts, on average, are expecting the solar issue to report a profit of 25 cents per share, down from 39 cents per share in the same quarter of 2008.

SPWRA has has an impressive history in the earnings spotlight, having exceeded the Street's profit expectations in each of the previous four reporting periods. Judging by option activity in recent weeks, some investors are betting on the stock to exceed earnings estimates yet again.

It's Friday, and a big storm is approaching the West Coast, a fitting end to a wild week. The SEC is investigating whether certain hedge funds allowed employees and favored clients to redeem their money before less favored clients. If allegations are true, then this gives new meaning to the term "front running", and should prove a great way to rebuild the reputation of an industry already viewed as having questionable ethics.

Sorry, hedgies. Headhunters think you have another 20,000 job losses ahead in 2009, representing a 10% industry contraction. As if it wasn't bad enough that your base salaries were getting hammered.

Yet Vikram Pandit shocked with news that Citigroup, Inc. (NYS: C) may run a profit. The question -- for how long? Credit cards, commercial real estate, and many other shoes still dropping. Our Piqqem Sentiment on TARP recipients shows neutral across the board, so could Vik be right, and could it be that the gloom is lifting? Has TARP really been great coverage?

This post is part of our feature on Money Winners of 2008. See all 20.

Bill Ackman, who manages the hedge fund Pershing Capital, was one of the first major investors to realize what poor shape Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) were in. He warned that the apparent back-up of the federal government wasn't going to do investors much good unless the company fell apart and had to be bailed out.

"It doesn't matter what the rating agencies say about their capitalization," Ackman told CNBC. "Implicit guarantees don't work in the market that we're in now." And he turned out to be right, of course. Ackman was shorting the debt of Fannie and Freddie.

While Ackman has had to take some heat from investors who blame him for profiting off Fannie and Freddie's collapse, some critics say he was a bloodsucker, others point to his keen analysis as the reason we should allow short selling: it's the only way to offer an incentive to investors not to believe the hype.

I've written previously about how, like the rest of us, the hedge fund gurus are quickly seeing their returns, assets, and now, even freedoms evaporate. Dealbook reports today that the founder of the Bayou family of hedge funds was sentenced to more than four years in prison Tuesday for a scheme to defraud investors.

James G. Marquez was sentenced to 51 months in prison, to be followed by two years of supervised release. He also was ordered to pay nearly $6.26 million in restitution.

Ouch.

His scheme involved inducing "investors to contribute to funds by misrepresenting that the money-losing funds were highly profitable."

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

China Petroleum & Chemical (NYSE: SNP) volatility up into 8/27 EPS & Outlook. SNP, an energy and chemical company based in the People's Republic of China, is expected to report EPS on August 27. SNP is recently up $4.12 to $107. SBSH said on August 22: "We value SNP ADRs at $104 based on a sum-of-the-parts analysis." WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. SNP September option implied volatility of 42 is above its 26-week average of 33 according to Track Data, suggesting larger price risk.

CNOOC Ltd (NYSE: CEO) put volatility Elevated into EPS & Outlook. CEO as of 12/31/06, CEO owned net proved reserves of approximately 2.53 billion barrels of oil. CEO is expected to report EPS on August 29. CEO is recently up $2.28 to $117.28. WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. CEO September call option implied volatility is at 32, puts are at 46; above its 26-week average of 30 according to Track Data, suggesting larger risk.

PetroChina (NYSE: PTR) put volatility at 41 after reporting net profit increase. PTR, a People's Republic of China run petroleum and natural gas company, is recently up $3.71 to $144.35. PTR reported that its net profit for the first half of 2007 was up 1.4% from the first half of 2006. WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. PTR call option implied volatility is at 25, puts are at 41. PTR 26-week average option implied volatility is 29 according to Track Data. PTR puts are expensive because PTR is not easy to borrow.

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

McAfee (NASDAQ: MFE) volatility of 39 above 26-week average of 30. MFE, an intrusion prevention and security risk management provider, is recently up .22 to $33.75. MFE over all option implied volatility of 39 is above its 26-week average of 30 according to Track Data, suggesting decreasing risks.

Symantec (NASDAQ: SYMC) over all option implied volatility at 36. SYMC provides solutions to help individuals and enterprises assure the security and availability of their information. Soleil Securities says "we are reiterating our SYMC Buy rating and our $27 price target." SYMC over all option implied volatility of 36 is above its 26-week average of 33 according to Track Data, suggesting slightly larger risks.

Websense NASDAQ: WBSN) implied volatility of 42 above 26-week average of 32. WBSN, a web security and web filter software company, has a market cap of $907 million with zero long term debt. WBSN reported total 2006 revenues of $178 million. WBSN is recently down .02 to $19.97. WBSN over all option implied volatility of 42 is above its 26-week average of 32 according to Track Data, suggesting larger price risks.

Aladdin Knowledge Systems-(NASDAQ: ALDN) implied volatility Elevated at 39. ALDN is a global provider of security solutions that reduce software theft and protects network users from undetected spam & viruses. ALDN has market cap of $298 million with zero long term debt. ALDN reported 2006 annual total revenue of $89 million. ALDN over all option implied volatility of 39 is above its 26-week average of 33 according to Track Data, suggesting larger risk.

Volatility Index S&P 500 Options-VIX down 1.61 to 28.38.

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

The "Heard on the Street" column in The Wall Street Journal recommends oil as a good play in today's market [subscription]. As crude oil supplies should stay tight, the theory goes that oil prices won't be hit along with the stock and bond market, assuming a continued downturn. Oil, like other commodities, should rise if the dollar continues to weaken because it is a dollar-denominated asset. It's highly unlikely that OPEC will raise production for the commodity, even under pressure from the United States and other nations.

These factors are the primary reasons that many traders remain bullish on crude oil despite its recent drop. The quick take: crude oil could potentially serve as a hedge against overall market weakness because it's not nearly as correlated to the stock and bond market as other assets.

How can we play increasing crude oil prices? I came across two commodity price-related ETFs: iPath Crude Oil ETF (NYSE: OIL) and the U.S. Oil Fund ETF (AMEX: USO). As you can see from the chart, these two funds move nearly in lockstep, but I'd argue that the U.S. Oil Fund makes more sense due to its lower expense ratio -- 0.5% vs. 0.75%.

In the wake of the nation's subprime worries, Wall Street has over the past year tried to offload its risky mortgage-backed securities to just about anyone who showed an interest, including university endowments. Last month, it was reported that the top 53 university endowments, with assets of about $217Bi, have invested nearly 18% of their money into hedge funds. In contrast, the average pension fund has around 5% in hedge funds.

Today The Wall Street Journal reported that Harvard University's endowment fund has lost about $350M through its investment through Sowood Capital Management, a hedge fund founded by Jeffrey Larson and Stuart Porter. Larson managed Harvard's foreign stock holdings until 2004, and then left to start Sowood, which recently lost over half its $3B value through poor bond investments.

Harvard Management Co, manager of the university's endowment, has always been considered one of the nation's most successful investment management firms, with annualized returns of 15.2% over the past 10 years through 2006.

Their hedge fund strategy worked well in the past, especially during the period 2000-2002, when they generally outperformed other investments. Endowments, however, are late to the table. While $350M is only a dent in Harvard's $29B endowment, it highlights the risks that colleges are taking in nontraditional investments like hedge funds and private equity. If Harvard is making these mistakes, other universities need to seriously look at what they are doing.

Volatility Index S&P 500 Options-VIX down 1.38 to 15.41

Boeing Co. (NYSE: BA) -- implied volatility indicates low Risk. BA's first flight for the 787 Dreamliner (airplane #1) is "expected-targeted" in late August 2007. BA held a quarterly media briefing with commercial airplanes' CEO Scott Carson. BA is recently up $.32 to $90.31. BA's overall option implied volatility of 22 is near its 26-week average of 24, according to Track Data, suggesting decreasing price risk.

Oracle Corp. (NASDAQ: ORCL) -- April option implied volatility suggests Flat risk into EPS and Outlook. ORCL is expected to release EPS of $.23 after the close on March 20. Wachovia says "we anticipate in-line or better results, solid guidance for the rest of the year, and upbeat perspective on the market environment. Maintain Outperform." ORCL April option volatility of 28 is near its 26-week average according to Track Data, suggesting non-directional fluctuations.

Option volume leaders today were: AtheroGenics (NASDAQ: AGIX), Microsoft (NASDAQ: MSFT) and Qaulcomm (NASDAQ: QCOM).

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

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Mirant Corp. (NYSE:MIR) implied volatility Elevated at 32 as MIR trades near Record levels.

MIR is expected to report full EPS & hold a conference call on 3/5. MIR has been frequently mentioned as a potential candidate for announcing a recapitalization or a share repurchase. MIR call option volume of 1,044 contracts compares to put volume of 3,001 contracts. MIR overall option implied volatility of 32 is above its 26-week average of 26 according to Track Data, suggesting larger price risks.

New Century Financial Corp (NYSE:NEW) low cost deep OTM April & May 5 put spread trades as Hedge.

NEW, a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down 37c to $15.47. NEW deep out of the money April 5 puts traded 4,715 contracts near the bid at .12 & .13 cents above its theoretical value of .01 cent. NEW deep out of the money May 5 puts traded 5,568 contracts on the offer of .40 cents above theoretical value of .04 cents according to Track Data, suggesting spreaders paying up to hedge risk.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX up .50 to 10.68.

NewAlliance Bancshares-(NYSE:NAL) implied volatility spikes on heavy call volume. NAL, a bank holding company with assets of approximately $8 billion operating 88 branches in Connecticut & western Massachusetts, will be presenting at Keefe Bruyette & Woods bank conference on 2/28. NAL annual shareholder meeting is on 4/24/07. NAL has a market cap of $1.8 billion with a P.E. of 33. NAL call option volume of 1,318 contracts compares to put volume of 374 contracts. NAL March option implied volatility of 49 is above its 26-week average of 27 according to Track Data, suggesting larger fluctuations.

Hyperion Solutions-(NASDAQ:HYSL) low option implied volatility & volume discounts chatter. HYSL, a provider of business performance management software, is recently up .84 to $42.22. HYSL is up on ORCL takeover chatter. BAMO has a 12-month target of $40. HYSL over all option implied volatility of 30 is below its 26-week average of 32 according to Track Data, suggesting decreasing price risk.

TXU Corp-(NYSE:TXU) March option implied volatility of 38 suggests EPS event risk. TXU, manager of a portfolio of energy business in Texas, is recently up $1.45 to $59.09. TXU is expected to announce EPS of $1.20 on 2/27/07. The Texas State Office of Administrative Hearings will begin on June 27th according to press reports. TXU call option volume of 13,019 contracts compares to put volume of 3,916 contracts according to Track Data. TXU at the money option implied volatility is at 38, April is at 28 above its 26-week average of 27 according to Track Data, suggesting larger near term event risk.

Option volume leaders today were: General Electric (NYSE-GE), Qualcomm (NASDAQ:QCOM), Apple Inc. (NASDAQ: AAPL) and Amgen (NASDAQ: AMGN).

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX up .27 to 10.59.

New Century Financial Corp. NYSE: NEW implied volatility bid up as NEW sells off on restatement. New Century Fin'l, a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down $8.72 to $21.45. New Century Fin'l announced it will have to restate operating results for the first three quarters of 2006. Merrill Lynch downgraded NEW to Sell, Jeffries lowered to Hold & Friedman Billings downgraded NEW to Underperform. NEW March option implied volatility of 69 is above its 26-week average of 42 according to Track Data, suggesting larger price risks.

H&R Block-NYSE:HRB April option implied volatility & put volume elevated on hedging. H&R Block is recently down $.30 to $24.54. Soleil said on 2/7/07 "we rate H&R Block Buy; $29 price target. We believe Block is close to entraining sale of the company (whole or in parts)." H&R Block call option volume of 2,945 contracts compares to put volume of 42,299 contracts. HRB April option implied volatility of 33 is above its 26-week average of 26 according to Track Data, suggesting larger price fluctuations.

Option volume leaders today were: Cisco-(NASDAQ-CSCO), Akamai (NASDAQ: AKAM), Bristol Meyers Squibb (NYSE: BMY) and Apple Computer (NASDAQ: AAPL).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX down .14 to 10.28.

Amazon.com Inc. (NASDAQ:AMZN) - puts more active than calls as prices increase on purchase for Hedges. Amazon was trading up .71 to $38.38 around 2 p.m.. Amazon is expected to report EPS of $0.22 after the close. Lazard has a Hold rating on Amazon said on 1/31/07, "At current price levels, we believe the stock largely discounts strong growth, operating margins expansion, and improving free cash flow generation." Amazon call option volume of 43,043 contracts compares to put volume of 60,717 contracts. Amazon February option implied volatility of 58 is above its 26-week average of 39 according to Track Data, suggesting larger price fluctuations.

Neurochem Inc.'s (NASDAQ:NRMX) May option implied volatility keeps Climbing into Spring Risks. Neurochem issued a press release this morning indicating results from the first phase 3 study of NRMX's Alzhemed for the treatment of Alzheimer's disease is expected in the spring of 2007. Neurochem and partner Johnson & Johnson (NYSE:JNJ) have a PDUFA date for Kiacta for AA Amyloidosis on 4/16/07. Neurochem call option volume of 4,859 contracts compares to put volume of 5,129 contracts. Neurochem May call option implied volatility is at 152; puts are above 211 according to Track Data, indicating large price fluctuations. NRMX puts are expensive because Neurochem is difficult to borrow.

Option volume leaders today were: Altria Group Inc. (NYSE:MO), Google Inc. (NASDAQ:GOOG), Equity Office Properties Trust (NYSE:EOP), Bristol Meyers Squibb Co. (NYSE:BMY) and Sepracor Inc. (NASDAQ:SEPR).