Bizarre volatility bet in the options pits is a head scratcher ahead of Fed rate decision

The biggest trade in options on the Cboe VIX Index Tuesday was an unusual $6 million purchase of deep, deep in-the-money-puts that might be an unusual interest-rate play ahead of Wednesday's highly-anticipated Federal Reserve rate decision. Around 10 a.m. Chicago time, someone purchased 563 110-strike VIX puts expiring Oct. 21 for $5.1 million, as well as $1.2 million of the 130-strike puts expiring Nov. 18, the scheduled release date for next month's FOMC minutes. Not only was the premium more than any other single trade on the day, the choice to use extremely options so deep in the money – the VIX ended the session at 17.2 – with no open interest prior to Tuesday, is odd on its own.