Stocks closed modestly higher Thursday in front of options expiration and quad witching, after trading in a tight range for most of the session, as investors reacted to positive economic data and FedEx (FDX) - Get Report raising its full-year outlook.

The Dow Jones Industrial Average ended up 41.78 points, or 0.36%, to close at 11,499. The S&P 500 rose 7.64 points, or 0.62%, to close at 1242, and the NASDAQ was up 20.09 points, or 0.77%, to finish at 2637. Most key S&P sectors rose, led by industrials, materials and utilities.

Gold fell more than 1% as investors took profits and pondered the euro's near-term direction and remained concerned about the euro zone debt crisis. The slump came as the dollar recovered against the euro after data showed positive business conditions in the U.S. Mid-Atlantic region.

Friday is "quadruple witching", the quarterly settlement and expiration of four different types of equity futures and options contracts. Expiration usually leads to greater volume and volatility as players adjust or exercise their derivative positions.

CBOE Volatility IndexI:VIX calls were active as spreaders roll positions. VIX closed down 3.07%, at $17.39, on total put option volume of 115,000 contracts and 371,000 call contracts, with January and February 37.5 calls as the most active series. 60-day implied volatility is trading at 72 and 90-day implied volatility is at 68, indicating decreasing price movement in the outer months.

December options contracts expire Saturday, December 18 (last day to trade is Friday), while VIX contracts expire on Wednesday, December 22 (last day to trade is Tuesday.) As a reminder, VIX contracts are on a different expiration schedule than "standard" options, expiring on the Wednesday that is thirty days prior to the third Friday of the calendar month immediately following the expiring month.

SPDR S&P 500 ETF (SPY) - Get Report December calls were active on delta neutral spreads into quad witching. SPY closed up $0.72, at $124.82, trading 6x the average daily volume! Overall put volume of 2.00 million contracts compared to 8.35 million call contracts, with December 120 calls as the most active series on 1.68 million contracts. Tomorrow is the date many large ETFs will trade ex-dividend, so a number of traders actively traded massive deep in-the-money blocks of calls to take advantage of dividends 'left on the table' by long call holders who fail to exercise their positions tonight. January put option implied volatility is at 16 and February is at 19, below its 26-week average of 22, suggesting decreasing 2011 price movement.

PowerShares QQQ Trust (QQQQ) December calls were active as spreaders leg out of non-directional price positions, with the Qs approaching a three-year high. QQQQ finished higher by $0.42, at $54.58, trading 3.1x the average daily volume. Total put option volume of 153,000 contracts compared to 968,000 call contracts, with January 45 calls as the most active series on 240,000 contracts. January put option implied volatility is at 19, February is at 21 and March is at 23, versus its six-month average of 22, suggesting low near-term price movement compared to outer months.

The following economic data are expected to be released Friday: Leading Indicators due out at 10:00 a.m. EST. Overseas, the EU Leaders Summit will continue to take place on Friday and there will be a lot of headlines about the sovereign debt situation in Europe and the officials ability to agree on a way to handle pockets of debt problems and bolster confidence in the single currency. OptionsProfits For actionable options trade ideas from a team of experts, visit TheStreet's OptionsProfits now.

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