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Not the best grammar but I wanted an attention grabber.

Did anyone catch the volatility markup at the end of the day today?  We had fairly solid preopening activity this morning, but news of the budget standoff sent the market into a small tailspin.  The volatility players are in the serious business of trying to handicap the outcome of the Fiscal Cliff talks.  Yesterday players were pricing in a much better shot of things going through earlier than not.  VIX traded as low as 15.57, as it sold off most of the day yesterday.  After an aggressive print on VIX settlement this morning, volatility traders started buying options in Jan cycle for the big indexes.

Well the good news, at least from the markets perspective, is that the ECB outlined some kind of plan for buying and supporting Euro area debt.  For the most part, it was the same assembly of loose promises and goodies, but that should be enough to get the animal spirits rolling in Europe until the end of the week.  Add to that a pretty decent ADP payroll report that seems to point to employers getting past the tumult of last year’s crisis.  The SPX cash closed over 2% for a big relief rally.  Here is where it gets weird. 

While many traders are talking about the low VIX (in IV terms yes, in HV terms debatable), under the radar is a different type of volatility sell off, commodities and precious metals.

I was recently having a discussion with a group of option mentoring students on Calendars.  The calendar that we were trading was making money, but it was strange.