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One trader just set up a $50 million wager against the market's "fear gauge."

The largest single trade in the options market on Friday is a "whopper" of a bet that an exchange-traded fund linked to the CBOE Volatility Index will fall sharply over the next two years.

An options trader in the UVXY ETF is either hoping for calm markets to persist, or for a structural quirk in the ETF's structure to erode its price by nearly 40%. Associated Press

More precisely, the trader seems to be betting that a structural quirk of VIX exchange-traded funds will continue to erode prices over the long haul.

Here's what happened: Somebody bought about 105,000 "put" options in the ProShares Ultra Vix Short-Term Futures ETF (UVXY), a leveraged ETF that promises double the daily return certain VIX futures. Buyers of put options (contracts that allow the owner to sell shares at set price in the future) generally profit when shares decline. In this case, the trader targeted $9 puts that expire in January 2017, according to Trade Alert. That means the contracts can be swapped for shares at a profit should UVXY fall roughly 40% before expiration. The ETF fell 5.2% to $14.91 in recent trading, on pace for an all-time low.

Short-term traders tend to use ETFs tied to the VIX to position for potentially market-moving events. For instance, billions of dollars poured into XIV-related ETFs an anticipation of the Federal Open Market Committee's policy statement earlier this week.

But the cards are stacked against anyone who dares hold products like UVXY over the long term. That's because the so-called roll cost of VIX futures eviscerates the ETF's price. The roll cost occurs when an ETF (or exchange-traded note) switches its underlying futures contracts for longer-dated ones. Most of the time, those longer-dated contracts are more expensive than the near-term ones. Such price erosion means that a buyer of UVXY at its launch, in 2011, would have lost 99% of their money if they still held it today.

It's impossible to say with certainty that Friday's options trader is betting against (for?) the UVXY's roll cost. Some traders told Barron's that the options trade could only be the tip of a much larger, more complex trade.

But Henry Schwartz at data firm Trade Alert is a believer:

"Whopper of a trade in ProShares short-term VIX ETN...

With a premium near $54 million, the buyer may be looking for UVXY to continue to exhibit the contango-related decline associated with ETNs that roll futures positions.

The block, executed on NYSE-ARCA, is the largest ever to print since options were listed on UVXY three years ago."