More of the same old, same old light volume, holiday trading. We drift slightly higher throughout the day, only to come back in at the close to end the session relatively flat. Traders refrain from major moves in the final trading days of the year as the major U.S. indices are on track to increase by more than 10% in 2010. No one wants to commit to the long or short side without market confirmation, only to get caught in an uncomfortable, illiquid position. It will be interesting to see how psychology and expectations play into trading strategies when 2011 kicks off and participation and volume returns (hopefully).

The Dow Jones Industrial Average ended up 9.84 points, or 0.09%, to close at 11,585. The S&P 500 rose 1.27 points, or 0.10%, to close at 1259, and the NASDAQ was up 4.05 points, or 0.15%, to finish at 2666. Among key S&P 500 sectors, energy, materials, and consumer discretionary rose, while financials and utilities fell.

CBOE Volatility IndexI:VIX in-the-money January 20 puts were active as the VIX trended lower on holiday trading patterns. VIX closed down 1.37%, at $17.28. 60-day implied volatility is at 77 and 90-implied volatility is at 71, indicating slightly price movement in the outer month contracts. 80,000 put contracts traded, compared to 69,000 call contracts, with January 20 puts as the most active series on 53,700 contracts.

The SPDR S&P 500 ETF (SPY) - Get Report closed higher by $0.09, at $125.92, as it touched a new 52-week high. The ETF has rallied 17 out of the last 20 sessions. Overall, 497,000 put contracts traded compared to 312,000 call contracts, with January 131 calls as the most active series on 31,400 contracts.

PowerShares QQQ Trust (QQQQ) March 48 and 544puts were active as traders initiate positions for 2011 movement. The Qs closed up $0.12, at $54.79, on 178,000 put contracts compared to 73,000 call contracts. January call option implied volatility is at 15, puts are at 17, while March calls are at 17 and puts are at 21, versus its six-month average of 22.

Proshares UltraShort Barc 20 Year Treasury ETF (TBT) - Get Report ended down $1.29, at $37.81, on a better-than-expected seven-year auction, resulting in a yield of 2.830%. January 39 and 40 were active, on overall put contract volume of 34,000 compared to 64,000 call contracts. January put option implied volatility is at 31, below a level of 33 before the auction results were announced, while February is trading at 34 compared to its 26-week average of 34. Decreasing January volatility suggests less movement into expiration on January 22, 2011 (last day to trade is Friday, January 21).

The remainder of the week will be very quiet as there are no major corporate events on the calendar and very few economic ones. The following data are expected to be released on Thursday: Jobless Claims due out at 8:30 a.m. EST. Chicago PMI at 9:45 a.m. EST, Pending Home Sales at 10:00 a.m. EST and the EIA Natural Gas Report at 10:30 a.m. EST; Friday: None.

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