Since it's possible I might use options to trade this system (unfortunately you might not be able to because I don't post my results until after 4:15 EST which is when the options market closes), I am analyzing different option strikes this morning to see which did the best. Turns out, going for in the money puts would have been better.
SPY ETF. All exp dates are Dec 2010. Prices taken at 10 AM EST. Not sure what these would have been at the open.
Although potential option prices are complicated to forecast, based on this alone, it appears going a few points up the scale in the money would be the best. I feel it is far safer to go 1 pt in the money, so in this case, the Dec 120 strike would have been fine. Good profits plus less risk.