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The Dow closed at 11,115 Fri. However, INTC GM WMT KO and IBM have underperformed for years. One strategy is buying $1 of Jan '07 in-the-money calls on these five Dogs of the Dow for each $1 in DIA Jun in-the-money puts. If the market is about to fall sharply, DIA may fall more than the Dogs of the Dow (or some of the Dogs may rise). If the market rises, the Dogs may rise more than DIA. However, it's more likely DIA will fall sharply.

INTC closed at 20.61 Fri. The trading range over the past three years has been roughly 20 to 30. The high was about 75 in mid-2000 and the low was below 13 in late-2002. INTC was downgraded Fri on concerns about inventory build-ups and losing market share to AMD.

GM closed at 21.92 Fri. It has been in a downtrend, since the high at 83 in early 2000. In late Dec '05, it fell to 18.12, which may be a long-term low. The relatively low market cap, currently $12 billion, has made it volatile. GM could easily bounce above 30 by mid-2006.

WMT closed at 46.10 Fri and reports earnings Tue before the open. Over the past five years, it has traded in a steady range between roughly 40 and 60, i.e. throughout the market crash and cyclical bull market.

KO closed at 41.79 Fri. It peaked above 85 in mid-1998 and fell into a downtrend reaching a low just below 36 in early 2003. A bullish symmetrical triangle has been developing, since the early 2003 low, although it may be many months before a breakout to the upside.

IBM closed at 80.71 Fri. It reached a high above 136 in mid-1999 and fell into a downtrend. It has traded between 70 and 100 over the past three years and may be a buy in the low 70s.

I'd prefer to hold cash than buy 2007 calls on the Dogs of the Dow with DIA Jun puts. Nonetheless, they may be worth following for long-term buys on pullbacks.