There's a million different ways to play this bet, but very few pure ones.
I still think this whole issue is politically charged smoke and mirrors, but it's brought the fear back in the market so I'm all for it.
One of the better, albeit less liquid markets to watch is Intrade -- they have two different markets going right now with respect to a resolution to this debt voodoo. The difference? The time:
So the "market" is giving us a 1/12 shot that something will get fixed by this weekend. Not the best odds.
But a raise before the end of August skyrockets up to 82.7%, so they're saying "not this weekend, maybe next time."
Given the fact that our markets are acting as a miniature version of the TARP vote in 2008, I may just shut it off for the rest of the day.
One more thing: see those percentages? See how they decline as we get closer to contract expiration? That's theta. OptionFu can help you learn it all.