Stocks are suffering another rough day on Thursday, as the S&P 500 looks to log losses for the fourth-straight session for the first time this year. And that's unwelcome news for one big options trader, who has staked $100 million on a bet that the market doesn't have much further to fall.
On a punishing Wednesday for stocks, one firm appeared to spot sunshine peaking through the clouds. And in one of the biggest options trades of the day, one party sold a great deal of "put" options on the Nasdaq 100, a bullish trade that shows a great deal of confidence that the recent losses won't greatly accelerate.
Specifically, this firm sold 41,500 October 3625/3600 put spreads for 60 cents each. This trade provides a high-probability chance of allowing the trader to keep the $2.5 million collected on the trade, as the market merely needs to avoid falling 9 percent from current levels. However, if the Nasdaq 100 drops 9.7 percent, this trader will see a loss on this trade of $101.30 million.
As that incredibly lopsided risk-reward relationship attests, "this is obviously the kind of trade that one places if you're not really concerned," said Mike Khouw of Dash Financial.