We’re moments away from testimony from Federal Reserve Chairman Ben Bernanke who will speak before the Senate Banking Committee any moment now. The market is getting crushed again today as Wall Street tries to get a grip on the financial sector. The Dow is down nearly 200 points and is currently trading at 10,855 just 30 minutes into trading.

Merrill Lynch (MER, $24.60, down $1.28) is once again trading lower and the July 32.50 puts (MERSA, $8.00, up $1.75) are having another field-day. I mentioned yesterday that the $4.50 stop could get hit and that you could only sell half of your position. What a great call. Merrill hit a high of $28 on Monday but quickly reversed course after that brief one-hour rally we had yesterday. Merrill reports earnings Thursday so we will be out by Wednesday no matter what. The puts have nearly tripled from our entry price of $2.15 as we have rode Merrill lower like a rented mule. Although there is no-way Merrill will pull a rabbit-out-of-the-hat trick with its earnings, it’s better to be safe than sorry. Raise stops to $7.00.

Elsewhere, Wachovia (WB, $8.22, down $1.62) is now trading below $10 a share. Citigroup (C, $14.22, down $1.00) is headed there. Fannie Mae (FNM, $7.60, down $2.13) and Freddie Mac (FRE, $5.25, down $1.86) are having a race to see who goes bankrupt first. Goldman Sachs (GS, $152.85, down $5.82) looks poised to test its 52-week low of $140.

Rick Rouse