[John Shiznit]

I dont really see how you can have any protection in a trade like this.
With fairly deep out of the money options you just have to take the approach that there is a high probability of losing everything on the trade.
If you think a stock will crash why do it any other way.
Like somebody said though you should just make a trade like this is a small enough percentage of your bankroll that
a. you can repeat the trade for the next month's period (generally you have to be very patient in the stock market)
b. just make it a small enough percentage of your bankroll that is not a huge issue when it does not work out.

Yes writing options will probably yield huge profits every month. As the writers do have a field day. But it is the only way to buy stuff like this and gain the huge leverage advantage. Generally though the writers have enough backing to hedge out a trade like this by shorting the stock.
So basically if you know all this going in nothing wrong with doing the trade.
There are alot of disadvantages to straight short selling, also. So options definitely have some use in this type of trade.