The VIX measure of expected market volatility rose in Monday trading to a three-week high amid a continued decline in technology stocks.
Even against a backdrop this week that includes three central bank meetings, Attorney General Jeff Sessions' public hearing and continued uncertainty surrounding how quickly the Trump administration can implement its proposed policies, the CBOE Volatility Index is still hovering around the lowest levels since the index's inception more than two decades ago.
"Maybe Friday's technology sell-off is the beginning of a broader event. Maybe the FOMC meeting this week will conjure a surprise. But the burden is on volatility to demonstrate it can scare anybody," Jim Strugger, managing director and derivatives strategist at MKM Partners, wrote Monday in a note to clients.
While several major hedging metrics don't suggest "total disregard for risk," Strugger wrote, "it's been a while since there was any urgency to add protection."
Even seemingly notable jumps in expected volatility are still relatively muted.
Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors, pointed out in a Monday note to clients that asset managers more than doubled their long VIX exposure in the week ended last Tuesday.
Still, while money managers did indeed go longer over the last week, the exposure is not meaningfully high on a historical basis, Chintawongvanich said Monday in a phone interview.
"It's still punishing to be long volatility," said Chintawongvanich, who earlier this year pointed out a pattern of colossal, near-daily trades on the VIX betting on a spike in volatility, but ultimately proving to be massively unfortunate as the VIX hasn't budged.
The level at which the "fear gauge" is trading is not as meaningful as its price fluctuations, said Stacey Gilbert, head of derivatives strategy at Susquehanna.
"The number itself I'm less interested in because it's so much more of a global market. The correlations are so low in the market, now, that the VIX is just going to be a lower number," Gilbert said Friday on CNBC's "Trading Nation."
The historically low VIX, which measures the cost of 30-day options on the S&P 500, can be attributed largely to three factors, Gilbert said: the S&P 500 is trading in an extremely tight range this year, correlations within the market are low and global events that may typically send the VIX higher are relatively scarce right now.
"There's no big geopolitical issue out there that's creating volatility, so it's keeping that number low. But on a day-to-day basis, as that fluctuates, I think can be an indicator of how that sentiment is in the marketplace," she said.
While there is potential for a jump in expected volatility, it is hard to draw a direct connection between specific world events and the level of the VIX, said Erin Gibbs, S&P Global portfolio manager.
"We tried to find the VIX being correlated to just about any fundamentals, or index, or macroeconomics, and we couldn't find anything. So it does seem to be completely independent of any other underlying fundamentals," Gibbs said Friday on "Trading Nation."
A move higher in the VIX could occur, she said, if investors shift their preferences from momentum stocks into some of the "laggards, or move out of U.S. equities across the board. Then we could see that increase in volatility."