Put volume is running at double the average pace in the American International Group, Inc. (NYSE:AIG - 32.37) pits today, with almost 17,000 contracts changing hands. It seems as though neutral-to-bearish investors may be banking on AIG to stay put (or move lower) in the intermediate term.

Most active today is the January 2013 35 put, which saw a block of 10,000 contracts trade at the bid price of $4.25. Given open interest is an unimpressive 1,370 contracts, it appears these options were sold to open.

If this doesn't look like a typical cash-secured short put (which are generally out-of-the-money and short-term), it's because it might not be one. The option block was flagged as a "buy write," so the trade combined the short puts with short stock.

In fact, minutes after the 10,000-contract block traded, a block of 610,000 AIG shares crossed the tape. Given the 35-strike put has a delta of 61%, it is possible this was a delta-neutral trade used to bet on limited volatility.

Although AIG has gained 39% in 2012, it has moved all of 1.6% in the last three months. Since mid-June, the stock has bounced within a range between $30 and $33. In fact, Schaeffer's Volatility Index (SVI) of 25% is lower than 99% of the past year's worth of readings. And in the past week alone -- according to iVolatility.com -- the mean implied volatility (IV) index has dropped from 37.4% to 26.87% (near the 52-week low of 24.6% reached in mid-March).

Declining volatility will diminish the value of the put, which is a positive for the put seller. At the same time, if the trader continues to maintain a delta-neutral stance (by buying/selling shares as needed), any price action in the stock will have limited impact on the strategy.

But wait ... there's more

Another possibility is that the trader assumed the delta risk on his own in hopes of securing a better price or a quicker fill on the large put block from the market maker, who then wouldn't have to take on the delta risk himself. In this case, the trader may have sold these puts with plans of quickly exiting the short-stock position.

Because volatility is so low, the options are very inexpensively priced, so this strategy could be a way of "locking in" a per-share purchase price of $35 in January for an effective price of $30.75 (given the premium collected). If we see another large block of stock hit the tape in the next few days, this may have been the strategy behind the position. Either way, the trader is hoping to benefit from low volatility in AIG shares.