Barron’s’ Steven Sears warns that the options market is preparing for Knight Capital Group’s stock to continue falling. Put prices increase when stock prices decline.

Shares of the market-making firm have been decimated in the past two days due to a $440 million trading loss caused by an electronic trading error that impacted the price of about 150 stocks listed on the New York Stock Exchange.

The company has since revealed in a Thursday press release that its “capital base has been severely impacted.” Knight Trading’s executives were not immediately available for comment.

Though Knight Trading has said its broker/dealer subsidiaries are in full compliance with net capital requirements, and that it will continue trading and market-making activities, the action in the August $2.50 puts indicates great skepticism about the company’s future.

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