HBC

I bought an HBC put spread - specifically buying the January 2009 $75 strike price puts and selling the January 2009 $65 strike. Total cost is $1,000 (net $2 x 5 contracts). This is a recommendation of Daniel Jones:

• Today's recommendation is in the banking sector - a revisit to a name we've dealt with before, HSBC Holdings (HBC), which just released earnings results for the first half of 2008 (see conference call transcript). Globally, the bank did alright, however in the North American market, reserves for subprime mortgages, in which the company is the largest market participant due to its acquisition in years past of Household Finance, caused some very large losses.
• We think the stock has maintained its price levels admirably well, but we're expecting some downside in the shares as investors digest the earnings results.... The stock has risen strongly in the last few weeks. Much like the bounce we saw in the February - April 2008 time frame, we would expect some pullback over the next few months.
• The Relative Strength Index [RSI] and Moving Average Convergence/Divergence [MACD] stochastic lines are both slowly deteriorating though. Given last week's decline in oil prices, these shares, on a technical basis, could be vulnerable to a pullback."

The put spread will act as a hedge against my net long position. I also like the Jan '09 OE date.