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Stocks failed to hold gains and finished flat after the Federal Reserve left rates unchanged and signaled its readiness to enact accommodative policies if needed. The Dow Jones Industrial Average finished 7 points, or 0.07% higher at 10,761. The S&P 500 shed 3 points, or 0.3%, to 1140 and the Nasdaq lost 7 points, or 0.3%, to 2349.

The CBOE Volatility IndexI:VIX closed up $0.85, at $22.35, on wide price movement as the FOMC made no changes to monetary policy. VIX put volume of 109,000 contracts compared to call volume of 71,000, on active October 22 and 35 calls. VIX October 22 puts traded 22,000 contracts with volume increasing into the close.

SPDR S&P 500 ETF (SPY) - Get SPDR S&P 500 ETF Trust Report September weekly options were active as traders adjusted positions on unchanged FOMC policy. SPY closed down $0.23, at $113.98. Overall SPY put volume of 1.15 million contracts compared to call volume of 656,000. SPY September weekly 115 calls were active on 48,000 on short term speculation into Friday's weekly expiration. September weekly put option implied volatility is at 25 and October is at 21, suggesting larger near-term price movement.

PowerShares QQQ Trust (QQQQ) volatility stabilizes as traders prepare for the next trading catalyst. QQQQ closed down $0.01, at $48.82, on 272,000 put contracts compared to 151,000 calls, with active speculation volume in October 49 calls and October 48 puts. October put option implied volatility is at 21 versus its three-month average of 26.

August housing starts rose 10.5%, a four-month high, the largest increase since November, to an annual rate of 598,000 units versus consensus of 550,000, the Commerce Department said. The SPDR S&P Homebuilders ETF (XHB) - Get SPDR S&P Homebuilders ETF Report closed up $0.07, at $15.64. XHB spreaders were active in October 2010 calls and January 2012 calls as a hedge to potential share price movement. 50,000 of the January 2012 16 calls traded enough to cover approximately 5 million XHB shares. XHB October call option implied volatility is at 31, December is at 33 and January 2012 is at 35 versus its 26-week average of 36. XHB has traded between its 100-day moving average of $15.54 and its 200-day moving average of $15.94 over the last three weeks, suggesting traders expected a breakout from its tight three week range.

Looking ahead to Wednesday, the following economic data are expected to be released: MBA Purchase Applications due out at 7 a.m. EDT and the EIA Petroleum Status Report at 10:30 a.m. EDT.

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