A bear spread, and a very smart play in my opinion. Essentially, both puts are at zero premium and unless the Q's have a serious rally, they will remain that way, which means the worst he can do is break even on the contracts while pocketing the interest drawn on the excess from the sale of the 55 puts.
The interesting part is that if he is right and the markets (including the Q's) tank, he can lift all or part (depending on how much risk he was willing to take) of the hedge by selling the 45 strike puts at some point when he considers the markets to be at a bottom - he can do it all at once, or he can do it in stages as the market goes down. That not only gives him a big profit on those puts (temporary, but he can draw interest on it for a while), but also gives him up to almost 2 years (depending on how long it took the market to make bottom) for the market to recover for him to make a profit on the 55 strike puts from that point.
The remaining short put position would be deep in the hole at that point, but totally offset by the gain in the 45 puts. In effect, he would be locked into a long position at that price on the Q's with no cost whatsoever, and drawing interest on a bunch of money. Note that he could care less if the Q's never even approach 55, since he will profit dollar for dollar on any rise from the level he took the bear leg off. His only risk would be for the market to continue to go down.
Not bad - I wish I had thought of that, but even more, I wish I had the bucks to do it <gg>.
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