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Shaun -

The thing I am worried about with options is obviously the leverage. With shorting, even the movement is against you, with sensible stops, you can limit your loss to a large extent. However, with options - the leverage and the bid-ask spread will kill you if you do not have high volume trades on (which is true with most of Reggie's research).

I guess it all comes down to your level of risk tolerance. The market in 2009 is going to be a very tough one to negotiate for both bulls and bears. I am 80% in cash right now and waiting for a clear signal. S&P 1000 and I am going all in ;D