Investing.com - The VIX volatility index jumped nearly four times the S&P 500's decline at its intraday peak on Friday, October 16, marking the fifth-largest reaction on record for a 1% or greater drop in the index, according to UBS.

The reaction moderated to approximately 2.5 times by the session's close, with the constant one-month futures basket showing less than a two-times reaction. Credit concerns within the artificial intelligence sector spread to equity volatility markets, similar to events that occurred on October 16, 2025.

UBS's Turbu-lens indicator reached April lows, suggesting reduced stress ahead. The firm noted that cross-asset volatility has been less subdued, signaling an increased likelihood of higher volatility but with less panic.

The bank characterized the move as too technical to be sustainable, citing a combination of options greeks and stretched systematic positioning. UBS said the technical factors have since subsided.

UBS maintains that volatility risk premia may stay elevated through the October Federal Open Market Committee meeting and midterm elections. The firm proposed a VIX November 17/16/15 put tree trade at $0.28, with negative 2% delta and 2.6 times net maximum payout, based on October 19 pricing.