A tumultuous start to 2016 sent volatility surging this week.
The CBOE volatility index spiked above 20 for the first time since mid-December, as U.S. equities saw their worst start to a year since 2008. Despite the burst in volatility, some options traders are betting that better days could be ahead.
On CNBC's "Fast Money" Wednesday, Mike Khouw noted that as global equities have tumbled this week, there's been an abundance of put activity in the VIX. "When you are making bearish bets on the VIX, then you are making bullish bets on the S&P 500," said Khouw. The S&P 500, which is inversely correlated with the VIX, is trading at its lowest level since October 2015.