You may not have felt it yet, but inflation is running rampant for certain commodities. Prices for some raw materials like cotton, oil, aluminum, tin and many others have skyrocketed in the last year. Manufacturers from electronics to apparel are feeling the pain as they report lower earnings due to higher raw materials costs. That can only mean one thing: prices will be going up on many items in the near future or profit margins will be lower, driving down earnings.

If the first scenario plays out, then inflation will start making a comeback as it will take more dollars to buy the same products. That means a semiconductor chip that cost $2.50 last year may cost $2.75 this year. Same chip, just more expensive. Or an all cotton shirt that cost $50 this year will go to $60. Same shirt, just more expensive.

Late Wednesday, DryShips (DRYS) reported that its third-quarter profit climbed 57% to $49.3 million, or 18 cents per share, while revenue increased 1.5% to $225.5 million.

On an adjusted basis, earnings for the quarter arrived at 38 cents per share. Operating margin improved to 48% from 40.4%. The results surpassed analysts' expectations, which called for a profit of 25 cents per share on $217 million in revenue.

China wants to join the international trading club. Regulators approved "in principle" the trading tools of stock index futures, short selling and margin trading. These trading practices have long been used in London, New York and most international trading exchanges.

It will take about three months for the new changes to take effect. Meanwhile,stocks of major Chinese brokerage houses were bid higher in anticipation that they will be making margin loans to investors.

Trina Solar (NYSE: TSL) shares are falling this morning after the company reported a first-quarter profit of $12.9 million, or 51 cents per share. Despite beating analysts' estimates, TSL shares are dropping as investors seem to be looking at TSL's forecast for the coming quarter, when they expect operating margins to increase by as much as of 2%. 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 TSL.

After hitting a one-year high of $73.06 in July, the stock hit a one-year low of $25.88 in March. This morning, TSL opened at $45.12. So far today the stock has hit a low of $44.67 and a high of $48.00. As of 12:05, TSL is trading at $45.65, down $3.98 (-8.0%). The chart for TSL looks bullish and steady up until today's drop.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $55 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 two weeks as long as TSL is below $55 at June expiration. Trina would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.

TSL hasn't been above $55 since December and has shown resistance around $51 recently. This trade could be risky if the cost of oil (and alternative energy) keeps skyrocketing over the next two weeks, but even if that happens, this position could be protected by resistance TSL might find around $51, where it topped out in May.

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 TSL.

Hot Topic Inc (NASDAQ: HOTT), the specialty retailer that operates the Hot Topic and Torrid concepts, might be worth a look. The stock is way off from its $30 high and is now selling for $11, and its poor operating performance could be bottoming.

While same-store sales continued to slide in May, down 6.1%, margins for the retailer are beginning to improve. Also, SAC Capital has racked up 5.1% of Hot Topic stock, or 2.3 million shares up from the 245K shares it had disclosed at the end of the first quarter.

With bad inventory out the door and movies like the Transformers and a whole new generation of video game consoles and games coming to market, this trendy retailer stock could be ready for a nice turnaround.

Whole Foods Market Inc (NASDAQ: WFMI) is showing multiple signs it is not time to jump into this stock, yet. Comp sales are slowing while costs are increasing--a margin squeeze which could be with the company for a while.

Comparable store sales grew 6% which appears solid considering it came off a 12% increase in the prior year. However, it was below the 8% to 10% long-term goal Whole Foods has been targeting.

Private label grew 16%, which is another sign of increased competition. A&P, plus others, are coming out with some nice remodelings which can compete against Whole Foods. Also, one must remember, the organic food company sells expensive stuff, although that has not dissuaded consumers in the past.

Another sign of growth moderation is that average transactions per week increased approximately three percent to 3.4 million, and average basket size increased approximately three percent to $34.

Overall, Whole Foods is a company that can still make a lot of money for investors when its increased investment in new store opening proves fruitful. Wait for management to indicate margins have bottomed and comps are about to ramp after the new-store openings begin to show up in results.

GE is looking to ramp up its operating margin throughout its various manufacturing processes in order to boost operating profit. On the one hand this is a 'no duh' sort of press release. What company isn't trying to make its manufacturing process cheaper so that it can ask the same price and make more profit on each item?

But in order to stay on top GE is looking to take its 15% operating profit and boost that a percentage point each year to 18% by 2009. To do that it is focusing on increasing margins in places like its locomotive plants. Right now a train engine takes about a month to build, and GE wants it to take ten days.

Although investors will no doubt applaud this focus on the margin and faster production terms, one hopes that a manufacturer of jet engines that keep our planes aloft does not lose sight of the longer term picture. Some of us will remain happy with GE focusing on quality in some areas rather than increased margins.