If you want to play along with the hedge funds I recommend put options in AMBAK (ABK) or MBIA (MBI). I bought my Jan 09 100 puts in ABK recently when the stock was at $94. It has since dropped to $87 ish. Other stocks I recommend that will take hits from the housing crash are the cruise lines like RCL and CCL (discretionary income in the form of housing equity will dry up), Las Vegas Casinos (they’ll suffer greatly as Californians will have to cut back on trips to Vegas…Vegas has become very expensive in the last few years due to Californians paying the higher prices and minimum gambling limits…Las Vegas will be hurt by the housing crunch, gas and the Indian Casinos). See also Black and Decker (BKD) and Whirlpool (WHR), both near their highs and due to get whacked very soon.
The homebuilders and lender stocks are too obvious and have already been hit. Idiots will chase those now. You have to look beyond the obvious, and these are the ones.
Lastly, the automakers are getting clobbered but are too obvious. Look instead to their parts suppliers that have yet to decline. Get them while their hot and bet against them. They are going to drop and drop sharply.
Look beyond the obvious choices. The opportunity to make huge gains in put options exist on the above mentioned issues