Fear is in a bull market.
The VIX , which measures prices for puts and is often called the "fear index," jumped 26% today and hit the the same it did the day Lehman filed for bankruptcy.
"It's total panic," said Brian Stutland, president of Stutland Equities.
Earlier today, one investor bought 15,000 of the VIX 50-strike calls, a bet that doesn't pay off unless the VIX hits 50 by May Expiration.
So why are options traders so bearish?
"There is so much uncertainty. People want to protect profits, and they're willing to pay up for it, even if that protection is expensive," said Dan Nathan, Options Action Contributor.
Having said that, the spike in the volatility index might be a bit overdone according to some market participants.
Including today's move, the VIX is up 88% since the S&P hit its high of 1343 on February 18th, yet the market is only off by 6% over that time, hardly a move that would justify such panic.
So is there is fear bubble?
"There's a knee-jerk reaction to latest headlines in Japan for sure," said Cantor Fitzgerald's Mike Khouw. "But in the end, volatility begets volatility."
Watch Options Actionon CNBC Fridays 5:00pm ET, Saturdays 6a ET and on Sundays 6a ET
Questions, comments send them to us at: email@example.com