I'm tired of talking about Europe, so I am going to focus on what we are seeing on the charts because it should give traders a pretty good road map of what you should be doing as you are deciding to get short or long.
The down trend started in May is still holding and when the price jumped up to $136 the market was not willing to accept the reality of $136 as a reliable price level, but it did move closer to the $130 level yesterday. Today some positive data about housing came out and we drifted higher but the price action the last two days indicates that the SPY has not gone anywhere. The highs and lows of yesterday and today are pretty equal.
We could continue to see some fall out from Europe the rest of this week if that occurs the shorts are going to make some profit down into the support level of $130. If SPY is able to hold support it would be wise to get out of your short positions. It's possible to play the up swing, but it might be better to wait and see how SPY tests resistance at $136 again. For now I am holding on to puts until I have some confirmation, maybe tomorrow, that SPY is moving higher.
This market is a traders markets so it pretty wise to take positions for a couple of days and get out because the volatility can turn on a dime.