Suntech Power Holdings Co. Ltd. (NYSE: STP), a Chinese solar cell company, announced this morning a $1.5 billion contract with Asia Silicon to purchase high-purity polysilicon over the next seven years. The contract secured lower prices for STP than any of its other existing polysilicon contracts. If you think that the company 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 STP.

The stock has been gaining over the past two months, and today's sharp jump propelled shares to a new 52-week high. STP opened this morning at $49.89. So far today the stock has hit a low of $49.03 and a high of $54.70. As of 10:50, STP is trading at 54.55, up 7.61 (16.2%). The chart for STP looks bullish and steady, 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 January bull-put credit spread below the $35 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 5.3% return in just 3 months as long as STP is above $35 at January expiration. Suntech would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

STP hasn't been below $35 by too much since June and has shown support around $39 recently. This trade could be risky if the Chinese economy does not remain strong, but even if it happens, this position could be protected by strong support between $35 and $39, plus the stock's 200-day moving average, which is currently at $37 and rising.

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 STP.

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.