1- agree that on down days volume was much higher some time 3-4 times higher then Average
2- this rally do not have nothing with the economy it has things with future expectation
2a- due to this reason when the market will correct the correction will happen so fast that only traders that have position will gain money (the other that will not be in will no enter after the correction because they will think that market correction is over....)
3- to be short is very frustrated but remember that in one good day you will win all what you lost in one or even 2 years
4- the big question is who is buying for real not for momentum?
5- when market is up due to momentum players this is the best professional shorter dream, because the crash when it happen it happen in days and you can make 20 times more
6- ones you want to throw the towel this is the time to increase your short position
If you buy puts you are making a directional bet within a given time frame. You must feel confident in the time parameter you have set in order to win. Options also have the advantage of being able to leverage your money; you are only buying the rights to sell or buy shares; not actually buying or selling the shares at full face value.
If you short a stock it is true that your "theoretical" loss is unlimited but you have the advantage of not having to time it all correctly as it is only a paper loss until you close the short. Stocks do not go to infinity so realistically, set a price target that you want to get out at if you are wrong in your predictions and stick to it!
Let's say you short ABC @ $50/share and in 6 months it is $70; you have a $20/share PAPER loss. If you purchased puts on ABC with a $50 strike price expiring 6 mos from purchase date you lose everything you put in. With a paper loss you can continue to hold. With options, you are out of luck, time and money,
In summary, buy Puts when you are very confident in the time parameters of your contracts (or if you are buying insurance against a long position where the Put would go up in value if the price of the shares you are insuring go down).
Short shares when you believe the direction of the share price is going down but the timing may be variable.