Most binary options platforms allow you to trade commodities, indices, currencies and stocks. When we think about trading binary options we have to take a look at the VIX or volatility index (also referred to as the Fear Index or Gauge index) of the Chicago Board Options Exchange (NASDAQ:CBOE). The VIX is a popular measure of the implied volatility of the Standard & Poor 500 Index. The S&P 500 has of 5.8 USD Trillion Dollars in benchmarked capital, and comprises of the leading 500 companies in the US economy.
Since we are all aware of the global implications a country like Spain may have on international markets, I was interested in knowing how did S&P's downgrade of Spain's sovereign credit affect US the equity markets volatility levels, with particular emphasis on the VIX.
After doing some research here are the conclusions: The downgrade had no significant effect. In fact, quite the opposite is true. The VIX fell from the close before the downgrade to the opening the day after.
Taking the 250 trading days from 2 May 2011 to 26 April 2012 the VIX had an expected (standard deviation) daily logarithmic return (close-close) of 0.0062% (805 bps). The VIX closed on Thursday at 16.24 and opened Friday at 15.83, representing a -2.6% move (it closed at 16.32 ). Assuming these returns are normally distributed one would expect a move of at least this magnitude 50% of the time.
Against a generalized hyperbolic distribution (asymmetric) of lambda -2.31, alpha 0.80, mu -0.04, sigma 0.07, and gamma 0.04 we would expect a move of at least -2.6% 61% of the time (derived via Monte Carlo methods).
To put a final nail in the coffin, note that volatility is mean reverting and that we are significantly below the 52-week and marginally below long-run average. Thus, if nothing of any consequence happened on a given day we would actually expect market noise to push the VIX up (life tip: don't trade volatility).
Since the VIX tracks the expected volatility of the S&P 500 we can conclude that the Spanish downgrade probably had a negligible effect on US blue chips.
To give a better idea of the two density functions:
 If we use Thursday close to Friday close this was a +0.5% move which we would expect at least 48% (Gaussian) or 42% (asymmetric generalized hyperbolic) of the time
UPDATE: uses VIX instead of VXX (VIX futures). Figured the expectation of future variance, itself a partial derivative derived through a theoretical model from an index of derivatives on an index of stocks, gets far enough without taking a future of that expectation.