How To Trade The Saving Of Portugal (EWP, STD)

After Portugal's government decided against austerity and Prime Minister Jose Socrates resigned, Portugal really only has one option: take a bailout from Europe, or watch the country crumble. Portugal has two maturities coming due, one in April, and one in June, and Portugal will have to refinance, worth a total of 9.2 billion euros. Considering the bond market is demanding equity like returns, north of 8%, this is clearly unsustainable. Portugal can negotiate with the European Union in exchange for some austerity measures, and have the European Financial Stability Facility purchase Portuguese bonds. If Portugal can buy itself time and is able to put forth the austerity measures needed for the country to get back on track, then perhaps Portugal won't need as large a bailout as the market is suggesting. If it can't, and the government is forced to accept a larger bailout, then the pain felt by citizens will be worse than imagined, and Portugal may be in the same situation Ireland and Greece are in currently. So how to trade it? If Portugal is able to get its fiscal house in order, then Spain, and particularly Spanish banks should be able to benefit. If traders believe that Portugal is able to get things straightened out, iShares MSCI Spain Index ETF EWP and Banco Santander, S.A. STD should benefit.