Insurance

Remember "Portfolio Insurance" from the '87 crash? Well, nowadays, we have CDS. The problem with CDS, however, is that no one who's reputable will write any more.
See "MBIA Writing 'Very Little' New Business." AIG, a latecomer to the business because they had a AA, not AAA rating, was hammered by the market today as they wrote down $11.2 billion. Anyone still writing in this market probably has an even lower rating. One of these days, the whole CDS market will just seize up. No one will be able to hedge any more. Unlike 1987, the Fed's already abandoned the dollar. A catastrophic plunge might deal the market an unrecoverable blow. As Mish has pointed out on numberous occasions, markets don't crash from overbought, they crash from oversold.

As far as my specific strategy goes, I'm looking for the VIX to go over 30 again. It's up halfway to 26.50 today from 23 earlier this week.