The benchmark gauge for American stock options rose the most in 18 months Monday as partial election results in Italy and the lack of a political deal to avoid automatic spending cuts in the U.S. sent stocks tumbling.

The Chicago Board Options Exchange Volatility Index, or VIX, also called the "fear gauge," climbed 34 percent to 18.99 – the biggest advance since August 2011. The Standard & Poor’s 500 Index slid 1.8 percent to 1,487.85. The VIX, which measures the cost of using options as insurance against losses in the S&P 500, a week ago closed at the lowest level since April 2007.

“Volatility often behaves this way in front of events,” Peter Cecchini, global head of institutional equity derivatives at New York-based Cantor Fitzgerald LP, said in an interview. “It’s as if people who have been sleeping at the wheel suddenly wake up to see the back of a tractor trailer way to close for comfort, and then they jam on the brakes.”

Friday' deadline to avoid automatic U.S. budget cuts marks another fiscal showdown between President Barack Obama and congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.

Italy may require another vote after partial election results suggested the four-way race may end in a divided parliament, an aide to Democratic Party candidate Pier Luigi Bersani said. Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti.

Italian Election

The results suggest Silvio Berlusconi may have built a blocking minority in the Senate to deny outright victory to Bersani.

“I’d say it’s Italy,” Philip Orlando, chief equity strategist at Federated Investors, which has about $380 billion in assets under management, said in a phone interview. “The concern here is that Berlusconi is still in the mix, that there’s going to be a runoff or some sort of additional election. You’re looking at split government and this is not as clean as the market was looking for.”

The VIX has risen 5.4 percent this year, reversing a 23 percent drop in 2012. The gauge had its highest close of 2013 today.

VIX futures expiring next month rose 19 percent to 17.60. April futures increased 11 percent to 17.50.