The CBOE Volatility Index (VIX) tumbled over 12% on Monday to around 17.88, erasing most of last week's surge and fueling a swift rally in ETFs designed to profit when fear fades.

In typical market irony, ETFs set up to benefit from decreasing levels of fear are turning the tables on last week’s bout of panic, making fear exhaustion a tactical possibility.

SVOL ETF is rising fast. Check the chart here.

Leading The Charge

• Simplify Volatility Premium ETF (NYSE:SVOL): This return-generating ETF gains from shorting VIX futures but hedging with deep out-of-the-money VIX calls. It’s a subtle wager that fear will be present but remain contained. SVOL has risen as markets discounted extended panic, and its rich distribution yield remains a draw for income investors in jittery markets. The fund is up almost 2% on Monday.

• ProShares Short VIX Short-Term Futures ETF (BATS:SVXY): Upped sharply today at almost 3%, SVXY benefits when short-term VIX futures decline. It provides investors with a mechanism for expressing confident-calmness in the market, albeit at risk. It’s basically a contrarian wager that fear trade is excessive.

• -1x Short VIX Futures ETF (BATS:SVIX): The bolder brother in the family of inverse-volatility, SVIX leverages gains when volatility dips, such as today. Don’t be mistaken, though: this one cuts both ways. The fund is up more than 5% today.

Hold On, Didn’t Volatility Just Blow Up?

Yes, and in a hurry. Last Friday, the VIX surged 22%, its biggest single-day rise since April, following a softer-than-projected July jobs report, and a geopolitical flash point, sparked by a Trump tweet threatening U.S. nuclear subs off Russia.

The S&P 500 and Nasdaq 100 both fell ~2%, ending their summer rally streak. Wall Street’s volatility jitters were obviously laid bare.

And here’s the kicker: August isn’t exactly famous for chill.

Against the serenity of today, history cautions that this could be just the beginning of the volatility cycle. The past 30 years have seen August and September recorded as the two months most volatile for U.S. equities. The Vanguard S&P 500 ETF (NYSE:VOO) has averaged a loss of 0.56% in August and 0.65% in September based on historical data.

As speculators rush for late-summer holidays, liquidity dries up, and markets can react sharply on thin volume or headline-driven sentiment, such as, say, nuclear saber-rattling.

And that’s not all: Seasonax indicates a long-volatility strategy from Aug. 1 through Sept. 30 has returned positive 65% of the time in the last 35 years, with an average gain of 10.8%.

Bottom Line: The VIX may be off big today, but don’t write off volatility yet. ETF investors employing such measures as SVOL, SVXY, and SVIX are taking advantage of the current respite, but history dictates the next spike may be hiding just past Labor Day.

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