Crazy bets on market volatility and a big move in Morgan Stanley ... That's what the options market seems to be looking for, according to Rebecca Darst of Interactive Brokers.
The real attention-getter, Darst said, was a single huge bet that market volatility, as measured by the VIX index, would blast up to 50. At its Wednesday close it was around 36. The higher the VIX, an index of option hedging activity, the more nervous the market.
"We actually did see somebody enter a large-size long position in November 50 calls. On the VIX , November 50 calls," she said Thursday morning on CNBC. "It was 15,000 lot transaction. There was not terribly much open interest at the strike, so we can safely conclude that this was an opening purchase. (There is) about a 5 percent chance, according to current market conditions, that VIX will break 50 by November, so we'll see what happens. We've been stuck in a bit of a regime for several months where these incursions, up about the 50 line, have been very short lived."