CBOE Volatility Index (.VIX) took a stab at the 20 handle this morning. VIX fell to 20.34 before rebounding to 21.22 midday and is down .39 to 21.04. The market’s “fear gauge” is on a three-day 15.6 percent losing skid and falling to levels last seen in late-July. It’s interesting because the actual volatility of the S&P 500 (as measured by 30-day historicals) remains above 27 percent. The relatively low readings in the VIX might signal that some market participants expect orderly trading in the first part of 2012. Trading was uneventful in early-2011 until about mid-February. The S&P 500 moved 6.8 percent higher through Feb 18 and the 30-day actuals were around 10 percent. However, not all investors are discounting quiet trading through mid-Feb 2012 as one of the top trades in the VIX today is a Feb 32.5 – 35 – 40 call fly, bought for 40 cents, 5000X and a position that will payoff nicely if the index settles at 35 at the February expiration. The official settlement for VIX December options yesterday was just 21.46.