diff --git a/IPython/core/ultratb.py b/IPython/core/ultratb.py
index e1c1cae..d4780fd 100644
--- a/IPython/core/ultratb.py
+++ b/IPython/core/ultratb.py
@@ -374,16 +374,32 @@ def _fixed_getinnerframes(etb, context=1, tb_offset=0):
 # (SyntaxErrors have to be treated specially because they have no traceback)
 
 
-def _format_traceback_lines(lnum, index, lines, Colors, lvals=None,  _line_format=(lambda x,_:x,None)):
+def _format_traceback_lines(lnum, index, lines, Colors, lvals, _line_format):
+    """
+    Format tracebacks lines with pointing arrow, leading numbers...
+
+    Parameters
+    ==========
+
+    lnum: int
+    index: int
+    lines: list[string]
+    Colors:
+        ColorScheme used.
+    lvals: bytes
+        Values of local variables, already colored, to inject just after the error line.
+    _line_format: f (str) -> (str, bool)
+        return (colorized version of str, failure to do so)
+    """
     numbers_width = INDENT_SIZE - 1
     res = []
-    i = lnum - index
 
-    for line in lines:
+    for i,line in enumerate(lines, lnum-index):
         line = py3compat.cast_unicode(line)
 
         new_line, err = _line_format(line, 'str')
-        if not err: line = new_line
+        if not err:
+            line = new_line
 
         if i == lnum:
             # This is the line with the error
@@ -399,7 +415,6 @@ def _format_traceback_lines(lnum, index, lines, Colors, lvals=None,  _line_forma
         res.append(line)
         if lvals and i == lnum:
             res.append(lvals + '\n')
-        i = i + 1
     return res
 
 def is_recursion_error(etype, value, records):
@@ -869,7 +884,7 @@ class VerboseTB(TBTools):
 
         file = py3compat.cast_unicode(file, util_path.fs_encoding)
         link = tpl_link % util_path.compress_user(file)
-        args, varargs, varkw, locals = inspect.getargvalues(frame)
+        args, varargs, varkw, locals_ = inspect.getargvalues(frame)
 
         if func == '?':
             call = ''
@@ -879,7 +894,7 @@ class VerboseTB(TBTools):
             try:
                 call = tpl_call % (func, inspect.formatargvalues(args,
                                                                  varargs, varkw,
-                                                                 locals, formatvalue=var_repr))
+                                                                 locals_, formatvalue=var_repr))
             except KeyError:
                 # This happens in situations like errors inside generator
                 # expressions, where local variables are listed in the
@@ -968,14 +983,15 @@ class VerboseTB(TBTools):
         unique_names = uniq_stable(names)
 
         # Start loop over vars
-        lvals = []
+        lvals = ''
+        lvals_list = []
         if self.include_vars:
             for name_full in unique_names:
                 name_base = name_full.split('.', 1)[0]
                 if name_base in frame.f_code.co_varnames:
-                    if name_base in locals:
+                    if name_base in locals_:
                         try:
-                            value = repr(eval(name_full, locals))
+                            value = repr(eval(name_full, locals_))
                         except:
                             value = undefined
                     else:
@@ -990,11 +1006,9 @@ class VerboseTB(TBTools):
                     else:
                         value = undefined
                     name = tpl_global_var % name_full
-                lvals.append(tpl_name_val % (name, value))
-        if lvals:
-            lvals = '%s%s' % (indent, em_normal.join(lvals))
-        else:
-            lvals = ''
+                lvals_list.append(tpl_name_val % (name, value))
+        if lvals_list:
+            lvals = '%s%s' % (indent, em_normal.join(lvals_list))
 
         level = '%s %s\n' % (link, call)
 
diff --git a/IPython/utils/PyColorize.py b/IPython/utils/PyColorize.py
index 4693bbd..b94aea9 100644
--- a/IPython/utils/PyColorize.py
+++ b/IPython/utils/PyColorize.py
@@ -213,7 +213,7 @@ class Parser(Colorable):
 
         string_output = 0
         if out == 'str' or self.out == 'str' or \
-           isinstance(self.out,StringIO):
+           isinstance(self.out, StringIO):
             # XXX - I don't really like this state handling logic, but at this
             # point I don't want to make major changes, so adding the
             # isinstance() check is the simplest I can do to ensure correct
@@ -223,6 +223,8 @@ class Parser(Colorable):
             string_output = 1
         elif out is not None:
             self.out = out
+        else:
+            raise ValueError('`out` or `self.out` should be file-like or the value `"str"`')
 
         # Fast return of the unmodified input for NoColor scheme
         if self.style == 'NoColor':
@@ -275,12 +277,13 @@ class Parser(Colorable):
             return (output, error)
         return (None, error)
 
-    def __call__(self, toktype, toktext, start_pos, end_pos, line):
-        """ Token handler, with syntax highlighting."""
+    def _inner_call_(self, toktype, toktext, start_pos, end_pos, line):
+        """like call but write to a temporary buffer"""
+        buff = StringIO()
         (srow,scol) = start_pos
         (erow,ecol) = end_pos
         colors = self.colors
-        owrite = self.out.write
+        owrite = buff.write
 
         # line separator, so this works across platforms
         linesep = os.linesep
@@ -297,7 +300,8 @@ class Parser(Colorable):
         # skip indenting tokens
         if toktype in [token.INDENT, token.DEDENT]:
             self.pos = newpos
-            return
+            buff.seek(0)
+            return buff.read()
 
         # map token type to a color group
         if token.LPAR <= toktype <= token.OP:
@@ -316,3 +320,12 @@ class Parser(Colorable):
 
         # send text
         owrite('%s%s%s' % (color,toktext,colors.normal))
+        buff.seek(0)
+        return buff.read()
+
+
+    def __call__(self, toktype, toktext, start_pos, end_pos, line):
+        """ Token handler, with syntax highlighting."""
+        self.out.write(
+            self._inner_call_(toktype, toktext, start_pos, end_pos, line))
+