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Bracing for more fiscal cliff volatility: VIX rallies

December 27, 2012: 11:55 AM ET

Click chart for more on the VIX

Who's worried about the fiscal cliff? Who isn't. One look at the market's fear gauge, the VIX, and it's pretty clear that investors are among those feeling some agita.

Over the past month, the VIX has surged nearly 30%, hitting its highest level in months. And with mere days left for President Obama and Congress to reach a deal on the fiscal cliff, it's no wonder investors are bracing for a roller coaster ride.

Of course, if you look at the stock market, it may appear that worries have been baked in. But Thursday's dismal consumer confidence reading was enough to push stocks sharply lower.

All of that fiscal cliff fodder has given StockTwits traders plenty to chew on.

$VXX creeping up on a slow day. Might be a warning sign going into the end of the year, or perhaps just people hedging risk. $SPY

$VXX calls are hot hot hot and getting hotter. We have a VXX which could see 40++ next week easily! $$$

VIX now over 20 for the first time since July 25th. $VIX $$

That was a dicey time for investors.

Disappointing earnings, or shall I say guidance, were rolling in, Europe was heating up and U.S. economic reports were not painting a pretty picture so it's no wonder that volatility was on the rise.

This time around, it's solely the fiscal cliff that's driving that churning. And don't expect it to let up anytime soon...even if they strike a deal.

$VXX $UVXY - think big $ hedging, small $ using options to short. start of a bigger trend? mind the mid nov gap close. GL

2013 I will be long cash and large may prove to fail but it feels right to me $SPY

I don't think vcutrader is alone in his thinking.

Selling on somewhat light volume. breaking Support, I continue to wait til 2013. $SPY $VIX $DIA $QQQ

Most investors are unwilling to do anything until there's more clarity out of Washington. And really, can you blame them? The beltway insiders don't have the best track record in avoiding kicking the can down the road.

Remember the debt ceiling? Yeah, we're back in that boat too.

OMG Can we have more action and less press conf ? "@CNBC: Harry Reid to hold news conference at 1p ET on the fiscal cliff." $SPY

buying feb 30 puts on $VXX a not-so-bad idea. scale in

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Catherine Tymkiw
Catherine Tymkiw
News Editor CNNMoney

Catherine Tymkiw is a news editor at CNNMoney where she helps oversee breaking news coverage and futures planning. Previously, she was the investing editor. Prior to joining CNNMoney, she was the online editor at Crain's New York Business and has nearly two decades of reporting and editing experience. She tweets @ctymkiwcnn

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