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How a trader plans to make $21 million in one week

Despite being within arm's reach of record highs in the S&P 500, Dow and Nasdaq, one options trader appears to be bracing for a brisk selloff—and this person is betting millions that it will happen in the next few trading sessions.

"This looks like a protection play," Dan Nathan, founder of RiskReversal.com, said Wednesday of the eye catching trade.

Specifically, the trader bought 80,000 of the S&P 500 ETF June 5 weekly 209/206 put spreads for 35 cents each. In this bearish strategy, the trader purchased the 209-strike puts for 58 cents and then sold the 206-strike puts for 23 cents to offset the cost. The trade is profitable if the S&P 500 ETF, the SPY, is below $208.65, or down roughly 2 percent by the end of next week.

But what made the wager most notable to Nathan and other market watchers was the big payoff, as the trader could stand to make more than seven times what the trade cost them to put on. "The trade breaks even at $208.65, that's down about 1.7 percent with a max gain of $21 million if the SPY is $206 or lower by next Friday's expiration," Nathan said on CNBC's "Fast Money." And since each put option accounts for 100 shares (35 x 80,000), "they are risking $2.8 million in premium to make a potential $21.2 million on next Friday's close," he added.

Also noteworthy is the limited number of days this trade has to payout. Those options expire June 5, which also happens to be the same day the government releases its May unemployment report.

Read MoreStocks lower as Greece, Shanghai weigh; transports fall 1%

The S&P 500, Dow and Nasdaq were all lower in early Thursday trading.

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  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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