The VIX has been bouncing up and down like a frog on a trampoline. Big moves can translate into nice profits, and that’s exactly what VIX traders are hoping for. A record amount of VIX traders own puts, betting on a lower VIX. A mistake?

The VIX  is bouncing up and down like a frog on a trampoline. An 81% jump from January 15 to February 3 was followed by a 32% drop since.

Those kinds of moves get traders excited, and excited they are.

According to Bloomberg data, ownership of VIX puts has soared to a record all-time high of 3.2 million on February 6.

Assets in the VelocityShares Daily Inverse VIX ETN (NYSEArca: XIV), an ETN that profits from falling VIX prices, doubled over the past two weeks.

For the first time in history, the XIV ETN has more assets than the popular iPath S&P 500 VIX ETN (NYSEArca: VXX).

It appears that traders expect Janet Yellen to soothe the VIX lower and tickle the S&P 500 (SNP: ^GSPC), which moves in the opposite direction of the VIX 80% of the time, higher.

The chart below may explain why traders are VIX bears. 21 – 23 has been formidable resistance for over 18 months (for more details see article below).

The market likes to surprise as many people as possible, and although the strong bearish conviction of VIX traders (bullish for S&P 500) may well be a contrarian signal, similarly lopsided bearish VIX bets in the past ended up profitable more often than not.

If the latest correction is just another 2013-style correction, it likely ended last week (see correlation between VIX highs and S&P 500 lows).

However, any ‘Yellen rally’ would have to overcome and sustain trade above resistance at 1,810 1,815, which is comprised of the 20-day SMA, 50-day SMA, and prior high/low resistance.

In addition to the record VIX bets mentioned above, we spotted a record $18 million single bet.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

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