Stock Investors Look For Protection On The Downside

On CNBC's "Options Action," Mike Khouw of Optimize Advisors said the iShares iBoxx $ Investment Grade Corporate Bond ETF LQD traded more than eight times its average daily put volume on Monday.

“That was largely the result of a single trade in the March 129/125 put spreads,” Khouw said. There was one buyer of 70,000 contracts at an average price of $1.15 per contract, he added.

Traders are betting that LQD will fall 3.4% by March expiration. “That’s a move comparable to the one we’ve seen since Dec. 3," Khouw said. 

Investors may be looking to hedge risks, with the Nasdaq Composite down almost 6% year-to-date and the S&P 500 losing 3% in the same period.