Following the unprecedented market calm of 2017, which saw the longest stretch on record of the VIX trading below 10, 2018 started off with a bang, and the infamous Feb 5 VIXplosion which in the span of minutes wiped out several inverse VIX ETNs and resulted in the biggest spike in the VIX on record.

Since then, however, complacency has returned – if not to the rest of the world which as a result of the dollar’s ascent and sharp declines in asset prices is approaching a bear market…

… then to the S&P500, where no matter what happens, the S&P just keeps grinding higher as the VIX continues its descent back to single digit territory.

Or perhaps not: an unknown options trader is betting that the VIX is about to head back to where it was at during the market turmoil of February. While the VIX slumped to 12.37 on Thursday as the S&P rebounded over 2,900, and is down more than 66% from its Feb. 5 peak, one options investor is expecting a 60% surge in the VIX heading into November, just around the time the Republicans are expected to lose control of the House in the midterm elections.

So convinced is the vol buyer that VIX is about to soar that he or she left a sizable mark on today’s orderbook, with VIX options volume soaring to more than double the 20-day average as a result of the purchase of 76,000 November $20 calls offset by the sale of the same amount of November $26 calls and approximately 95,000 October $13 puts.

Whoever the trader behind this spread trade is, it is unlikely to be the infamous “50 cent” VIX buyer, who preferres unhedged, deep out of the money vol positions, which mostly tends to expire worthless with the occasional exception that more than pays off for the theta, such as what happened in February.

The MO of this particular “mystery vol trader” is more nuances, especially since he has put a cap on his gains. And more notably, as Bloomberg points out, while the trade’s ultimate goal is to profit off a surge in volatility, it appears it will be profitable even if the VIX doesn’t move given the trader collected about 8 cents per contract when it was executed.

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