The high yield bond market bounced off of multiyear lows this week as equities rallied in the face of Wednesday's highly anticipated Fed announcement. Despite the move, the high yield corporate bond ETF, the HYG, was still down 10 percent this year, and some traders sense more pain could be coming.
On Tuesday, when the HYG was up more than 1 percent, someone bet $1 million that the ETF will continue to fall for the next month. The trader purchased 25,000 of the January 77/74 put spreads for 40 cents each. This is a bearish strategy where someone will buy a put and sell a lower strike put of the same expiration to offset the cost. The goal is for the stock to drop to the put you are short or, in this case $74 by January expiration. That's as much as an 8 percent drop from its current price of around $80.