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Trader makes gutsy bet on a speedy market plunge

One trader appears to be wagering half a million dollars that the market is headed much lower this week, in Wednesday's biggest single options trade of the day, in terms of the number of contracts traded.

Shortly after noon ET, the trader purchased 50,000 Jan. 23 weekly 195-strike puts on the popular SPDR exchange-traded fund tracking the S&P 500, which trades under the ticker symbol "SPY." These options are perceived to have a low probability of paying off, which explains why they traded at a price of 9 cents a share, for a total outlay of $450,000.

That is the most the trader can lose, and as long as the SPY stays above $195 through Friday, the total amount will indeed be lost. However, if the S&P falls 5 percent between Wednesday at 2 p.m. ET and Friday's close (to give an example) the trader will enjoy a quick profit of more than $12 million.

NYSE New York Stock Exchange traders markets
Brendan McDermid | Reuters

Read MoreMarc 'Dr. Doom' Faber reveals the 'trade of the century'

Of course, the full motivation behind any trade can be difficult to establish. And at the same time the 195-strike puts traded, there were also big trades in the weekly 197-strike and 190-strike puts, indicating that the options trader could be shifting a position or establishing a multi-legged trade.

Nonetheless, the expectation certainly seems to be that a big downward move is coming in the sessions ahead. And with Thursday morning bringing the much-awaited decision from the European Central Bank, the catalyst may exist to make such a trade profitable.

"The die is cast. People are looking for 600 billion euros [worth of European quantitative easing] a year [almost $700 billion], and if there's anything less than that, we'll get a selloff and retest the recent lows down at 1,980," said Michael Block, chief strategist at Rhino Trading Partners.

Read MoreStocks mixed ahead of ECB; IBM weighs on Dow

Still, Block adds that this has become an especially hard market to trade of late—so traders might have better luck responding to the ECB decision than predicting it.

"The risk-reward of trying to be tactical here is not very good, so you might as well work on your knitting and be ready to implement a trade opportunistically," he said.

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