The underlying tone of trading remains cautious and the S&P 500 is down for a fifth consecutive trading session. CBOE Volatility Index (.VIX) hit a morning high of 23.31 and is up 1 point to 22.38.

Implied volatility is indeed higher across much of the options market. OVX, the VIX for Oil, is up 4.14 points to 57.31 and Gold Volatility (GVZ) jumped 4.07 points to 22.59. Small Cap Vols (RVX) and NASDAQ Volatility (VXN) are popping higher as well.

Since implied volatility is computed using options prices it tends to reflect expectations about the future. The recent trend is a sign of growing concerns about macro uncertainties, which have driven gold prices higher, ten-year Treasury bond yields to just 1.78%, and a five-day losing skid for the S&P 500.

Earnings results should not be overlooked, however, as the early numbers from the big financials have disappointed and now focus turns to Intel after the bell. The floodgates then open on fourth quarter numbers next week and clearly pre-earnings jitters are weighing on sentiment this week ahead of the deluge.

Meanwhile, the options expiration is driving higher volumes in puts and calls, as the Jan expiration is always busy because many former LEAP contracts are coming off the board. SPY Jan 200 puts, for instance, which first started trading in November 2012, are the most actives for a second day. With SPX near 2,000, SPY hovers around $200 per share and the Jan 200 puts are therefore at-the-money heading into tomorrow’s expiration. 119,000 contracts have changed hands today after nearly 200,000 traded yesterday.

High volume is also being seen in the following strikes: VIX Jan 18 puts, EEM Mar 34 puts, AAPL 110 calls.

Bullish flow (call buying) has been noted in American Airlines (AAL), Cypress Semi (CY), and Kraft (KRFT). Bearish activity (put buying) observed in Juniper Networks (JNPR), Altera (ALTR), and Masco (MAS).