Stocks closed up on Friday during the shortened-holiday week, on very light volume. Fewer than 1 billion shares have changed hands daily on the New York Stock Exchange this week. The Dow Jones Industrial Average ended up 47.53 points, or 0.46%, to close at 10,462. The S&P 500 gained 5.37 points, or 0.49%, to close at 1109, and the Nasdaq was up 6.28 points, or 0.28%, to finish at 2242.

Will the CBOE Volatility IndexI:VIX fall below 20? The index continues to trend lower on active call volume. October 18, 19 and 20 put volume was light. VIX closed down $0.82, at $21.99, below its 200-day moving average of $23.44. VIX put option of 143,000 contacts compares to 185,000 calls, with active weekly volume in October 45 calls and October 24 puts. Traders are rolling September option positions into October and November, prior to September expiration on Wednesday. Option volume was light in the out-of-the-money October 18 ,19 and 20 puts. Traders will be watching to see if these puts are being purchased as protection, if the VIX trades near 20. October 20 puts are 10% out of the money and closed at a price of $0.20.

SPDR S&P 500 ETF (SPY) - Get Report September volatility decreased as the market moved up and on time decay, into expiration. SPY closed up $0.56, at $111.48, with 939,000 put contracts trading as compared to 366,000 calls. The SPY's 0.5% rally is expected to test its 200-day moving average of $111.79. SPY weekly options were active, with October 112 calls active on 16,000 contracts. SPY September put volatility is at 18, October is at 20 and November volatility is at 23, suggesting traders are willing to pay up for November premium as protection, on the uncertainty of time.

The PowerShares QQQ Trust (QQQQ) rally continues The PowerShares QQQ Trust (QQQQ) closed up $0.17, at $46.60. QQQQ overall option implied volatility of 24 is below its three-month average of 26, suggesting decreasing price movement. QQQQ put volume was 290,000 contracts, versus 132,000 calls Weekly September calls were active, with spreaders active in October 45 puts and November 45 puts.

Looking ahead to next week, we can expect more participation and volume now that the summer season and holidays are over and the desks will be more full. We also have a heavy economic calendar for the week of September 13: Monday: Treasury Budget 2 p.m. EDT. Tuesday: ISCS-Goldman Store Sales 7:45 a.m. EDT, Retail Sales 8:30 a.m. EDT, Redbook 8:55 a.m. EDT, Business Inventories 10 a.m. EDT. Wednesday: MBA Purchase Applications 7 a.m. EDT, Empire State Manufacturing Survey 8:30 a.m. EDT, Import and Export Prices 8:30 a.m. EDT, Industrial Production 9:15 a.m. EDT, EIA Petroleum Status Report 10:30 a.m. EDT. Thursday: Producer Price Index 8:30 a.m. EDT, Jobless Claims 8:30 a.m. EDT, Current Account 8:30 a.m. EDT, Treasury International Capital 9 a.m. EDT, Philadelphia Fed Survey 10 a.m. EDT, EIA Natural Gas Report 10:30 a.m. EDT. Friday: Consumer Price Index 8:30 a.m. EDT, Consumer Sentiment 9:55 a.m.

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