The $3M bet against emerging markets

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Options Action: Emerging markets meltdown?

It's been a tough year for global investors.

Continued uncertainty over economic growth in China and a soaring have sent currencies, commodities and emerging market stocks into a downward spiral. The EEM, the ETF that tracks emerging markets, is down 13 percent this year, while the S&P 500 is roughly flat. Meanwhile, economically sensitive , and crude oil are trading near their respective six year-, three-month and year lows. And as the Federal Reserve points its fingers toward a possible December rate hike, one trader is expecting even more pain for the space.

In an eyebrow-raising transaction Wednesday, the investor spent $3 million on a bet that the EEM would plummet 11 percent by the beginning of next year. Specifically, that institution or trader purchased 60,000 of the January 31-strike puts for 50 cents each. Since each options contract accounts for 100 shares of stock, this is a multimillion dollar wager that the ETF will fall below $30.50 by January. That puts the EEM near multiyear lows. The ETF briefly traded below that level during the August flash crash.

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"That's an awfully bearish perspective on emerging markets," Mike Khouw told CNBC's "Fast Money" on Wednesday. "To put things in perspective look at a 10 year chart of the EEM," added the Optimize Advisers co-founder and CNBC contributor. "You have to go all the way back to 2009 to see the EEM consistently below the level of $30.50."

The EEM was trading slightly lower, around $34.25 early Thursday.