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SPY vs SPX, the One Question to Ask Before You Trade
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0:00lesson
SPY vs SPX options — key differences
- SPY is ETF, SPX is index
- SPY options can result in ETF shares
- SPX options cash-settled
- SPX no early assignment
- SPX size 10x SPY
2:20SPY· ticker
SPY — ETF shares, American-style
- SPY tracks S&P 500
- SPY options on ETF shares
- American-style exercise
- Dividend risk
- Assigned short put can result in shares
4:33SPX· ticker
SPX — index, cash-settled
- SPX is index
- Cash-settled
- European-style
- No ETF shares
- In-the-money cash amount based on index
4:34SPX· ticker
SPX — size and reference notional
- $100 multiplier
- SPX index level 10x SPY
- SPX reference notional $750,000
- SPY reference notional $75,000
4:35SPX· ticker
SPX — market activity and contracts
- SPX daily volume 4.63M
- Standard expirations: weekly, daily, end-of-month
- AM/PM settlement
- Global trading sessions
- Check bid/ask and expiration terms
4:36SPX· ticker
SPX — tax treatment
- SPX may qualify for section 1256
- 60% long-term, 40% short-term
- SPY follows standard ETF rules
4:37SPY· ticker
SPY — flexibility and contract size
- SPY allows ETF trading
- Smaller contract size
- SPY options may be assigned early
4:38SPX· ticker
SPX — building a defined risk trade
- Cash settlement, no early assignment
- Choose direction, expiration, strikes
- Max loss fits risk budget
- Show market view, price, max profit/loss
4:39SPX· ticker
SPX — closing thoughts on contract selection
- Right S&P view but managing unexpected
- SPY options can result in ETF shares
- SPX cash-settled, no early assignment
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