After starting off the year humming the theme to "Jaws," investors suddenly find themselves whistling "Zip-a-Dee-Doo-Dah."
The market has clearly come a long way from Feb. 11. In that session, the VIX rose above 30 as the S&P fell to 1,810. Now with stocks more than 10 percent off of their lows, the volatility gauge is almost 50 percent off of its highs.
"The beautiful thing about the VIX is that it's really where money talks," said Dennis Davitt, a longtime options trader now with Harvest Volatility Advisors. "So right now, people are selling options because they're feeling more comfortable," he said Thursday on CNBC's "Trading Nation."
The VIX, or the CBOE Volatility Index, is computed from the prices of options on the S&P 500 —hence Davitt's point that people are selling options rather than buying them.
The reason the VIX is a measure of market fear is that S&P 500 options are more frequently used to protect against downside than to speculate on upside. In addition, since stocks tend to fall more quickly than they rise, market drops are also associated with high volatility.
Of course, just because the market has become a bit more sanguine about the near future (the VIX technically measures expected volatility over the next 30 days) does not mean that equity pain can't soon return.
"The VIX tells us that things are kind of calm in the moment, but I don't know how much it tells us very far into the future," Curtis Holden, senior investment officer at Tanglewood Wealth Management, said Thursday on "Trading Nation." "So I'd say we're still pretty cautious."