OK, lots of people have given you information about the mechanics and risks of selling calls vs. buying puts.

I'll talk a bit about the overall strategy of why you'd want to use one instrument over the other.

When I think that the market for a commodity, stock, etc is going to go down over a sustained amount of time, I'll sell a call. When you sell a call, there are two ways you make money:

1. The price drops under the strike price. Your short call position (ie, sold call) does down in value according to the "delta" of the option. The "delta" of an option is a number between 0.0 and 1.0, and is indicating a proportion of how much the option will decrease or increase as the underlying instrument's price moves.

2. The "time value" of the option decays away. All options have a "time value" to them, and this value declines over the lifespan of the option. The rate of decline accelerates as you get nearer to the option expiry date. When an option has nearly its full life ahead of it, the decline from day to day in time value is very small. When you move into the last 60 days or so, the rate of decline in the time value will accelerate rapidly.


Now, when you buy a put, you'll still have the delta issue, and it will work pretty much as it does in a call. But you see, the delta is computed, in part, based upon recent price movement of the underlying. So let's say that the underlying commodity futures contract price (or stock price) has been moving up very steadily, without significant pullbacks, for months on end. If you look at two options - a call and a put, both at the same strike price, both with the same expiration date, you'll see that the delta is apportioned more to the call than the put. That's because the recent "historical volatility" has been mostly to the upside, so the market is pricing into the options the expectation based on past history of the price continuing to go up. This makes the call option cost more than the put, and the call option will have more "delta" priced in.


So, how to choose whether to buy a put or sell a call when you want to go negative? The way I do it goes kinda like this:

If I'm expecting the price of the underlying to move very sharply, very suddenly to the downside (or I just want to protect myself from this) and the price of the underlying has gone up very fast and hard over the last several months, I'll buy a put as far out into the future as possible, as close to the strike as possible. The price of the puts will be (relatively) cheap to what I might make by selling calls. The time decay on the puts (because I'm buying them as far out into the future as possible) will be small, and if the event I'm seeking to hedge against doesn't happen, I'll sell off the puts and not have lost much money on the trade.

Upsides:

1. If the price doesn't go down, my liability is limited. 
2. Time decay won't cost me much.
3. If the price goes up, the smaller delta on the put means I'll have time to sell the put before the option declines too much in value.
4. If the price goes down and I was using puts to hedge a long position, I can assign the underlying against the put and say "See ya!" to someone who sold the put.

Downsides:

1. Unless the price of the underlying goes down severely, and for a prolonged time, buying puts like this isn't a good way to make money using this technique as a base "short."
2. If I'm hedging a long position, this type of put buying won't make me much money, so it is best to simply assign the underlying and be done with the whole deal. Sometimes, I'll buy puts and use them to hedge declines in price of the underlying and I'll keep the underlying (eg, a dividend-paying stock).


If I'm expecting a sustained decline in prices, I'll sell calls. I don't have to sell calls at the strike price, I can sell calls above the strike price of the underlying. Sometimes when I see stocks that have zoomed upwards for  nine months, the gain I can make by selling calls well above the current price of the stock is pretty nice. Unlike when I'm buying puts, I'll sell calls closer into to expiration, because I want the accelerated decay rate of the "time value" of the option to work for me. When I sell options, I'm typically selling options that will expire in 60 to 100 days, because under 100 days is where the time value decay is the fastest. Every day that the time value decays and my option is out of the money, that's another day money is being put into my pocket.

When selling options, I always, ALWAYS, close the position before the option expiration day. I NEVER trust the market to deal with the option in my favor. eg, if I wrote a $55 strike call on some stock at $50 and the stock's price is now $30 and the option that I sold for $2.20 is now worth $0.05, I don't care that the pricing is so far in my favor, I will "buy to close" the option. I don't trust market makers and markets any more, and neither should you.

Upsides:  

1. You get your money up front.
2. Time decay works in your favor.
3. If you really wanted to go short with options for full delta, you could use the proceeds of writing a call to also buy a put. Remember, you don't need to buy the put at the same strike price or expiration. I won't get into all the "diagonal" option strategies here.

Downsides:

1. If the price of the underlying shoots up, you're screwed. You need to close the position before you're assigned (ie, before you have to buy a bunch of the underlying as a result of being assigned).
2. You will need a margin account to sell options. The brokers might limit your option positions until you show them that you know what you're doing.
3. Unlike buying an option, you must keep an eye on your written option positions at all times.

As to your example of a 40% swing either way: First, that's a huge move in a price. It won't happen all in one day, and it will change option strategies as that move is occurring.

As I mentioned above, the historical price trend is a big factor in how the options were priced to begin with. To really gain an understanding of how options react to various situations, you'll really be much better informed if you download an option analysis/pricing application. There's several available on smartphones, and several web sites. 

In your 40% move example, if you've had a sustained uptrend for a long time and you sold calls ahead of the price move, you'll look like a genius. The delta factor will be strongly in your favor in the first several days of the move, and time decay will just be icing on the cake.

But as the decline in price continues (and possibly accelerates), you'll see the pricing of options start to change very rapidly, as the option pricing models start to discard historical price movement and start raising the "implied volatility" of what they're trying to price into future movements. The price of calls will come down very rapidly, but puts won't come up quite as rapidly. There will be a period where you'll see that option strategies' returns suddenly start to rapidly decline, until a clear trend downward is established, and then you'll see the price of puts go up, and calls start to decline to very small prices. This is the "price of insurance going up."