In one of the Tuesday's biggest options trades, a major player spent $1.6 million on a highly risky bearish bet against the market.
Shortly after the open, three major blocks of S&P 500 ETF (SPY) options all expiring on June 30 were traded at once. In the most expensive "leg" of this option trade, 25,000 183-strike puts were bought for a total of $6.4 million. Against that purchase, 30,000 175-strike puts were sold for $3.3 million, and 10,000 192-strike calls were sold for $1.5 million.
That means that for a total cost of $1.6 million, this trader is betting that the (SPY) will fall 7 percent to the $175 level, which is just above its low for the year. If it does fall to that level, this trader will see $20 million in gains, for an $18.4 million profit on the trade. Below $175, the trader's gains will be capped by the sale of the 175-strike puts.