The $6 million bet against emerging markets

On a week filled with China concerns and market turmoil, one trader is making a massive bet that it's going to get a lot worse for emerging markets.

"The largest trade in the options market today was in the EEM, the emerging markets ETF,"'s Dan Nathan said Thursday, when one trader bought 100,000 of the June 25-strike puts in EEM for 62 cents per share. Since each options contract covers 100 shares of stock, this is a $6.2 million bet that breaks even if EEM is below $24.20 by June expiration.

So far in 2016, EEM has slid more than 7 percent. A drop to $24.20 would be another 19 percent drop from where the ETF traded on Friday.

Nathan said the next level of support for EEM should come in at $25. However, he said the large trade likely isn't an outright bearish bet, given the targeted expiration date and the out-of-the-money options traded.

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"This is a likely a hedge against an emerging market portfolio, or maybe there's an investor who thinks that puts are the best bang for your buck as far as hedging is concerned," he said on CNBC's "Fast Money."

If news from China gets worse, the EEM is likely to suffer further, given that China holdings make up more than 25 percent of fund's holdings.

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