VIX Closed Under 25 on Market Rally

The CBOE Volatility Index (VIX) was down 10.7% as the market rallied on Bernanke stimulus remarks, and ended the day down $2.92, at $24.45.
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Stocks finished a rocky week with a rally Friday, as investors blew off a revenue warning from technology bellwether Intel (INTC) - Get Report and a speech by Federal Reserve Chairman Ben Bernanke. The session was also very volatile. Major indices fell sharply after Bernanke's comments and Intel's warning, which came within minutes of each other. Stocks rebounded as the market digested Bernanke's speech. He said that while the Fed is not ready to re-engage, if deflation risks emerge, another round of quantitative easing could be used to help boost the U.S. economy.

The Dow Jones Industrial Average ended up 164.84 points, or 1.65%, to close at 10,150. The S&P 500 gained 17.37 points, or 1.66%, to close at 1064, and the Nasdaq was up 34.94 points, or 1.65%, to finish at 2153. All of the 30 Dow components were higher, with the lone exception, Hewlett-Packard (HPQ) - Get Report.

The CBOE Volatility Index (HPQ) - Get Report was down 10.7% as the market rallied on Bernanke's stimulus remarks, and ended the day down $2.92, at $24.45. VIX call volume of 100,000 contracts compares to put volume of 32,000 contracts.

The SPDR S&P 500 ETF (SPY) - Get Report call prices rallied as puts sold off and volatility held steady. SPY closed up $1.63, at $105.81. SPY September 107 calls rallied 37% to $2.09, with 2677 trades on contract volume of 109,000 ,at VWAP of $1.83.

The PowerShares QQQ Trust (QQQQ) closed up $0.53, at $44.07 and volatility was flat. QQQQ September weekly put option implied volatility is at 25, October is at 25 and November is at 26, which is the near 26-week average is 26. QQQQ calls have traded 256,000 contracts, versus 307,000 puts.

3Par (PAR) - Get Report were options active as surprised arbs adjusted positions on the $2 billion Hewlett-Packard (HPQ) - Get Report bid that trumped Dell's (DELL) offer. PAR closed up $6.43, at $32.46. PAR call option volume of 126,000 contracts compares to put volume of 61,000 contracts.

Looking ahead to Monday, traders will be focused on the Personal Income and Outlays report due out at 8:30 a.m. EDT. Other major reports and events expected next week include: Tuesday- S&P/Case-Shiller Home Price Index, Consumer Confidence Index and the FOMC minutes, Wednesday- August Auto Sales, Challenger Job-Cut Report, ADP Employment, ISM Manufacturing Index, Construction Spending and the Apple (AAPL) - Get Report event; Thursday- August Same Store Sales, Weekly Jobless Claims, Productivity and Costs, Factory Orders, Pending Home Sales; Friday- August Jobs and the ISM Services Index.

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