Is the VIX still the best gauge of fear?

Though all three major averages managed to finish in positive territory on Wednesday, reversing two-straight sessions of losses, the CBOE Volatility Index surprised some professional traders when it finished only slightly lower. The VIX, widely considered the best gauge of fear in the market, slid below 17.

Typically, if the stock market rises, traders are seemingly less worried and so the VIX falls. So, what gives? Is the VIX ceasing to be an indicator of fear?

No, said Dan Nathan, a pro trader and co-founder of After all, a lot could happen going into Labor Day weekend, especially amid speculation of a U.S.-led military strike on Syria, he explained.

"People are on edge and they're a little nervous and they're keeping that volatility in the market," Nathan said on "Fast Money."

VIX values greater than 30 are generally associated with a large amount of fear while values below 20 generally correspond to lower levels of anxiety among traders. A long-term view of the VIX, Nathan said, shows it's currently averaging a value of about 19.5.

The long holiday weekend is actually making the VIX appear lower than it really is, said Michael Khouw, a strategist and managing director at DASH Financial. With the markets closed for Labor Day on Monday, the options have become compressed, he said. If the number was adjusted for the market closure Monday, he thinks the VIX would be a bit higher.

To Tim Seymour, founder of hedge fund Triogem Asset Management, policy failure is going to be the biggest driver of the VIX.

"Right now, the Fed is the thing that people are focused on, but policy failures as they exist in Europe and as they exist in Japan for the time being have become distractions that we're not worried about," Seymour said. "I think ultimately, if you look at the data that's coming out here, the VIX is going to start to percolate even that much more. People are worried about policy mistakes because right now, the economy is doing what they expected it to."

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.