The spike in fear has a few traders looking to reap tremendous profits.
Since the CBOE Volatility Index, the VIX, tends to rally when investors feel worry it's often called the "fear index." But some are using that spike in fear as an opportunity to sell options.
Monday's selloff in stocks caused the VIX to rally 7 percent despite only modest losses in the S&P 500. That rally sparked a flurry of call activity, where volume ran 1.5 times its daily average. One notable trade was the sale of 56,000 of the June 18-strike calls for 41 cents each. Since each options contract size is for $100 times the VIX, the trader took in $2.3 million in a wager that the VIX will be below 18 by next Wednesday.
When traders sell calls, they are betting that the underlying security will stay below the strike of the call option that they sold.