The $5 million bet that oil ETF goes back to all-time lows

The outlook for oil is still looking pretty bleak to some traders.

Crude oil gained as much as 1 percent on Wednesday morning, the latest move in a series of wild swings for the beaten-down commodity. However, one trader is betting big that any rallies in oil won't last.

On Wednesday, one trader bet more than $5 million that the US Oil Fund ETF (USO) would fall back to all-time lows. Specifically, the trader bought more than 80,000 November 13.5-strike put options for $0.65 each.

This is a bet that USO falls below $12.85 by November expiration, an 11 percent decline from where USO traded on Wednesday morning.

"The stock would need to be well below $13, approaching basically the all-time lows that we saw earlier this year if those puts are to be profitable," CNBC contributor Mike Khouw said Wednesday on CNBC's "Fast Money."

Read MoreOil ends up 43 cents, at $44.91 a barrel after volatile session

In August, USO hit a low of $12.37, but has since bounced back to the $14 range.

Crude oil has plunged almost 16 percent year to date, thanks in part to an influx of supply from U.S. drilling and suppliers. The U.S Energy Information Administration recently reported that stockpiles of petroleum products had reached an all-time high of 1.3 billion barrels in September.

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