Stocks Finish Up, VIX Ends Higher With Active Spreaders

Stocks finish in the green, but off the highs, as the dollar slumped, gold soared and a series of better-than-expected earnings reports gave investors confidence in the economy's health. Volatility remains low in the SPY and QQQQ and stocks trend higher.
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Stocks finish in the green, but off the highs, as the dollar slumped, gold soared and a series of better-than-expected earnings reports gave investors confidence in the economy's health. The Dow Jones Industrial Average ended up 75.68 points, or 0.69%, to close at 11,096. The S&P 500 rose 8.83 points, or 0.71%, to close at 1178, and the Nasdaq was up 23.31 points, or 0.96%, to finish at 2441.

The CBOE Volatility IndexI:VIX closed up $0.15, at $19.08, with spreaders active in December 30 and 37 calls and January 30 and 37 calls. Overall put volume of 136,000 contracts compared to call volume of 401,000.

The SPDR S&P 500 ETF (SPY) - Get Report closed up $0.91, at $117.92, with overall put volume of 1.68 million contracts traded compared to call volume of 803,000. October option implied volatility is at 16 and November is at 19, below its four-month average of 25. SPY November 110 and 114 puts were active on low volatility of 23.

PowerShares QQQ Trust (QQQQ) puts were three times as active as calls on low volatility, as the Q's tested five-month highs. QQQQ closed up $0.41, at $50.52, on overall put volume of 427,000 contracts compared to call volume of 128,000, with January 46 puts as the most active series on 58,500 contracts. QQQQ November put option implied volatility is at 21 and December is at 23, below its three-month average of 26, suggesting decreasing price risk.

Google (GOOG) - Get Report October straddles were priced for a 4% move into EPS after the close tomorrow. GOOG October 550 straddle is priced at $23.00 and December is at $49.00. January option implied volatility of 27 is near its 26-week average of 28 according, suggesting larger, non-directional price movement after EPS.

General Electric (GE) - Get Report is scheduled to report Q3 EPS on October 15 before the market opens. GE October 17 straddle is priced at $0.55 and January is at $2.10. January option implied volatility of 29 is below its 26-week average of 32, indicating decreasing price movement after EPS.

Traders will be particularly focused on positions for the remainder of the week as October options cease trading at the close on Friday. In addition, there are a slew of important economic data to close out the week of October 11 including: Thursday: International Trade, Producer Price Index, Jobless Claims at 8:30 a.m. EDT, EIA Natural Gas Report at 10:30 a.m. EDT, EIA Petroleum Status Report at 11 a.m. EDT; Friday: Ben Bernanke speaks at the Boston Fed's conference on Revisiting Monetary Policy in a Low Inflation Environment at 8:15 a.m. EDT, Consumer Price Index, Retail Sales, Empire State Manufacturing Survey at 8:30 a.m. EDT, Consumer Sentiment at 9:55 a.m. EDT and Business Inventories at 10:00 a.m. EDT.

Away from the macro and onto Q3 earnings season as we kick into high gear this week. For tech, the other highlight besides Intel (INTC) - Get Report will be Google (GOOG) - Get Report on Thursday night. JPMorgan Chase (JPM) - Get Report was the first financial to report and beat numbers, although the bulk of bank EPS does not come until the week of October 18. CSX (CSX) - Get Report kicked things off strong on Tuesday for the transports and Landstar Systems (LSTR) - Get Report is schedule to report on Thursday. And finishing off the week is General Electric's (GE) - Get Report results Friday morning.

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