The fear is back.
After a brutal Thursday session, S&P futures and VIX futures both pointed the way toward another tough day for the markets in early Friday trading ahead of the jobs report. And that must be welcome news for one major options player, who made a multimillion-dollar bet that the surge in volatility will continue.
On Thursday, the S&P 500 lost 2 percent the CBOE Volatility Index (or the VIX) surged 27 percent to close at the highest level since mid-April. And in a big bet that there's more volatility to come, one trader bought 90,000 November 21/30 call spreads for about 70 cents each, in a $6 million trade that will only make money if the VIX continues to rise into the fall.
The VIX is known as the market's fear gauge, because it tends to rise as investors make options bets that the S&P 500 is vulnerable to a drop. That's also why the VIX tends to rise as stocks fall.