(Bloomberg) -- While many traders on Wall Street had a foot out the door for the long Labor Day weekend, at least one investor was buying protection against a September selloff.

Most Read from Bloomberg

• A Guide to Urban Swimming in Europe, Beyond the Seine

• Dense Cities With Low Emissions Suffer Most From Air Pollution, Study Finds

• Intergenerational Housing Could Help Older Adults Combat Loneliness

• Turkey Plans Istanbul Taxi Surge to Tackle Complaints

An options trader or traders bought call spreads on the Cboe Volatility Index — or VIX — expiring in September, spending upwards of $9 million to protect against a spike in the gauge of S&P 500 volatility past 22 from its current level of just over 15. A jump to that level would bring the VIX back to where it was Aug. 9, when the market was recovering from a sharp selloff.

There are reasons for investors to be wary of stocks retreating. September has historically been weak for the S&P 500, and this year, with the US presidential election around the corner, the month could be especially fraught. A slew of economic data ahead of the Federal Reserve’s interest-rate decision on Sept. 18 may shift expectations on how much, and how fast, the central bank will ease monetary policy.

“With short-term implied volatility down meaningfully from those early August peak levels, the investor could be looking to the spread as a low-cost hedge against another meaningful spike in near-term volatility, with next week’s nonfarm payrolls report and the September 18 Fed meeting serving as potential catalysts during a period that has historically seen weak seasonal returns,” said Christopher Jacobson, co-head of derivative strategy at Susquehanna International Group.

Some 350,000 contracts of VIX 22/30 call spreads expiring on Sept. 18 changed hands for about $0.25 each, some in small trades, others in big blocks. The trade will be profitable if the VIX Index jumps above 22, but gains will be capped at a reading of 30.

There are plenty of events ahead of the Fed meeting to spook investors. The Bank of Canada and the European Central Bank will make rate decisions earlier in the month. Closer to home, the US presidential debate may sway market sentiment, while US consumer inflation and employment reports will offer the Fed further look at the health of the US economy before its decision.

The trade is likely “hedging the slew of events the next month including payrolls, the first debate, CPI and a few central bank meetings,” said Daniel Kirsch, head of options at Piper Sandler.

Most Read from Bloomberg Businessweek

• Private Equity Is Coming for Youth Sports

• Need 100,000 Balloons for a Convention? Here’s the Guy to Call

• How Rent Controls Are Deepening the Dutch Housing Crisis

• Hong Kong’s Old Airport Becomes Symbol of City’s Property Pain

• How TikTok Turned Starface’s Pimple Patches Into a Beauty Obsession

©2024 Bloomberg L.P.