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Is the volatility spike already over?

Volatility surged as stocks tanked in mid-August, leading some to pen speedy obituaries for the long period of relatively low volatility that the S&P 500 has enjoyed.

Not even two months later, the calm already seems to have resumed.

The CBOE Volatility Index, which uses S&P 500 option prices to measures the size of expected stock market moves, collapsed from a brief reading above 50 to a Monday open below 16. Crucially, that means the index known as the VIX is now decisively back below its long-run average of 20.

To be sure, this tracks the impressive rise in stocks over the past few weeks. Since bottoming in late August, the S&P has risen 9 percent. And the VIX generally enjoys an inverse relationship to stocks, since index options are more commonly used for hedging than for speculation.

But actual volatility in the S&P 500 has plunged as well, dropping back nearly all the way to the quiescent levels seen in the middle of the year when the market was humming up and down in a markedly small range.

Now several traders see no sign that expected or actual volatility will pick back up anytime soon.

"The VIX has fallen back to what I call its 'comfort zone,' " where it has commonly found itself situated over the past few years, BTIG technical analyst Katie Stockton said Friday on CNBC's "Trading Nation."

For Cowen's head of equity sales trading, David Seaburg, the move lower in the VIX makes perfect sense.

"The fear that was put into this market was ridiculous," he said Friday on "Trading Nation." "There was an aggressive move in the VIX, and it's come in nicely as the fear has definitely subsided."

Referring to Q3 earnings, the state of the global economy, the Fed's next move, and the outlook for biotech, Seaburg commented that "a lot of the issues that have really plagued this tape have subsided right now, at least for the near term."

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But not everyone is breathing a sigh of relief.

MKM Partners derivatives strategist Jim Strugger wrote in a Monday morning note that the VIX is set to rise back into the mid-20s, and "equities are likely to pull back before sustaining a move back up toward the pre-shock highs."

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That said, on Sept. 25 Strugger joined with MKM's macroeconomic and technical research teams in painting a cycloramically bearish picture for stocks, writing that the VIX would not see a sustained move below 20 until mid-December, and that the S&P was set to fall about 5 percent.

The VIX "needs to lift toward 30 before we would feel comfortable that a sustainable low for U.S. equities has been made," he wrote at the time.

Prognosticators' comfort aside, the S&P 500 has risen 5 percent since then.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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