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VIX Closes at $23.25, Below its 50, 100 and 200 DMAs.

Upside call sellers on VIX September 27 and 30 calls are active on convictions that the index will not trade through $27.00 into expiration on Wednesday, September 15.

Stocks closed higher, led by the banks, but off the session highs. Investors continued to question the health of the U.S. economy and recovery efforts. Equities sold off a bit after the text of President Obama's speech on business tax breaks was made available. The Federal Reserve's Beige Book survey of 12 regional banks showed a deceleration in economic growth across the country. The Dow Jones Industrial Average ended up 46.32 points, or 0.45%, to close at 10,387. The S&P 500 gained 7.03 points, or 0.64%, to close at 1098, and the Nasdaq was up 19.98 points, or 0.90%, to finish at 2228.

The CBOE Volatility IndexI:VIX closed down $0.55, at $23.25 which is below its 50, 100 and 200-day moving average. VIX put option volume of 95,000 contracts compares to call volume of 174,000 contracts. Upside call sellers on September 27 and 30 calls are active on convictions the VIX will not trade through $27.00 into expiration on Wednesday, September 15. Note that VIX options expire always on the Wednesday that is 30 days prior to the third Friday of the following calendar month. Traditional U.S. exchange-listed equity option contracts expire on the Saturday that follows the third Friday of the month, unless that Friday is a market holiday, in which case the expiration is on the Friday.

Even though the SPDR S&P 500 ETF (SPY) - Get SPDR S&P 500 ETF Trust Report traded through its 100-day moving average of $110.66 at one point, profits takers sold on the release of the Biege Book, and ended up by $0.77, at $110.41. SPY put option volume of 843,000 contracts compared to call volume of 389,000 contracts. September put option implied volatility is at 21 and October is at 22, below its 15-week average of 23, suggesting decreasing price movement.

The PowerShares QQQ Trust (QQQQ) ended higher by $0.55, at $46.25. September put option implied volatility is at 22 and December is 25, below its three month average of 26, suggesting decreasing price movement. QQQQ put option volume of 179,000 contracts compares to call volume of 191,000 contracts. QQQQ is trading above its 50, 100 and 200-day moving average, which indicates that the market has more upside momentum than downside.

The Energy Select Sector SPDR ETF (XLE) - Get Energy Select Sector SPDR Fund Report closed up $0.53, at $53.92. Crude oil futures closed up $0.50, at $74.58. XLE overall option implied volatility of 26 is near its 26-week average of 27, suggesting non-directional price movement. Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report weighting is 19% of XLE and overall option implied volatility of 24 is near its 26-week average; Chevron (CVX) - Get Chevron Corporation Report weighting is 14% and overall option implied volatility of 24 is near its 26-week average; Schlumberger (SLB) - Get Schlumberger NV Report weighting is 17% and overall option implied volatility of 35 is near its 26-week average; ConocoPhillips (COP) - Get ConocoPhillips Report weighting is 5% and overall option implied volatility of 28 is near its 26-week average; and Occidental (OXY) - Get Occidental Petroleum Corporation Report weighting is 5% and overall option implied volatility of 32 is near its 26-week average.

Looking ahead to Thursday, traders will be focused on International Trade and Weekly Jobless Claims due at 8:30 a.m. EDT, EIA Petroleum Status at 10:30 a.m. EDT and EIA Natural Gas Inventory at 11 a.m. EDT.

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