Not only are short volatility bets at their peak...

The number of VIX futures contracts outstanding has never been higher...

As Bloomberg notes, the gauge of U.S. stock turbulence has more than 660,000 contracts outstanding, surpassing every previous high.

While the measure is heading for a second day of gains, its slump this year has led to a surge of bets on where volatility will go.

All of which builds on the Morgan Stanley concerns at what the market will do if "VIX goes bananas."