SPX is better but requires more money down (it's essentially 10 SPY contracts). The cash settlement and tax benefits make it the only one to choose tbh. There's also more contracts with more strikes to choose from. Example: SPY would have strikes at 519 and 520 while SPX would have 5190, 5195, 5200 and 5205.
SPX is superior if you have the account size for it. It can move fast, so you have to be disciplined. The tax benefits are good and if you have a broker that limits 0DTE on SPY, you may be able to on SPX since it's cash settled.
If you traded any broad-based index options that are cash-settled, such as SPX, NDX, VIX, any outright futures contract, or option on futures, any gains/losses are subject to different tax treatment–60% long-term and 40% short-term.
When comparing notional value, SPX is 10 times larger than SPY and nearly twice as large as /ES, while /MES, designed as a mini futures product, has the smallest notional value. SPY leads in trading volume, outperforming the others by a significant margin.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
The difference reflects the cost of carry in futures, which includes dividends from the S&P 500 stocks and interest rate costs to finance the portfolio over the futures contract's duration. Whether /ES trades at a discount or premium to SPX depends on the relationship between the interest rate and dividend yield.
As European-style options, SPX contracts can only be exercised at expiration, eliminating the risk of early assignment. Traders may also benefit from a 60/40 tax treatment, and their ability to trade until market close adds flexibility while reducing the risk of early position closeouts.
The IRS applies what is known as the 60/40 rule to all non-equity options, meaning that all gains and losses are treated as: Long-Term: 60% of the trade is taxed as a long-term capital gain or loss. Short-Term: 40% of the trade is taxed as a short-term capital gain or loss.
Tax treatment
This means gains or losses when trading SPX are treated as a mixture of short-term and long-term capital gains no matter how long the security was held. SPY options do no benefit from the 60/40 tax rule and are therefore subject to traditional capital gains taxes and holding times for short-term vs.
As S&P 500 companies trade on the NASDAQ and New York Stock Exchange, traders like to trade the S&P 500 index during main market hours between 09:30 and 16:30 EST. Trading during these hours often offers greater liquidity and tighter spreads.
The average yearly return of the S&P 500 is 10.569% over the last 100 years, as of the end of December 2024. This assumes dividends are reinvested. Dividends account for about 40% of the total gain over this period. Adjusted for inflation, the 100-year average stock market return (including dividends) is 7.405%.
$S&P 500 Index (. SPX.US)$ is a stock index that provides information on the performance of a basket of securities so you cannot trade SPX directly.
Is Investing in the S&P 500 Less Risky Than Buying a Single Stock? Generally, yes. The S&P 500 is considered well-diversified by sector, which means it includes stocks in all major areas, including technology and consumer discretionary—meaning declines in some sectors may be offset by gains in other sectors.
At Robinhood, index options are available on popular benchmarks such as SPX, NDX, RUT, and VIX. Additionally, the S&P 500 Mini Index (XSP), which is 1/10th the size of SPX, is also available.
The SPY is a singular trading vehicle, instead of scanning 100-200 stocks to find movers, the SPY usually has some really good moves daily. The SPY options have 3 expiration a week, meaning you have more choice and liquidity. The SPY options on a shorter term basis are cheap (can find options under $1.00 or $100)
What is the 100k Rule? The $100K Limit means that the maximum amount of ISOs that an employee can receive per year is $100,000. The calculation for the rule is simple. First, take the total number of options granted then divide by the number of years it will take to fully vest.
However, to make $500 a day trading options while keeping to generally recommended risk management practices — where your daily profit target is between 0.5% and 1% of your portfolio per day — you should have a trading balance ranging from $50,000 to $100,000.
Generally speaking, SPY options are more actively traded, so they tend to have greater market liquidity and smaller differences between the bid and ask prices (aka “bid-ask spread”). SPX shares are still very liquid, but prepare for wider bid-ask spreads.
What happens if an SPX option expires between the short and long strike? SPX settles in cash at expiration. If SPX closes between the short and long strike, the short option would expire in-the-money, and the long option would expire out-of-the-money.
You cannot directly invest in the S&P 500 index itself. You can buy individual stocks of companies in the S&P 500, or buy an S&P 500 index fund or ETF.
SPX vs.
This is because the SPX, representing the S&P 500 Index, is approximately 10 times the value of the SPY, which is an ETF tracking the S&P 500. So, for example, if SPX is trading at 4,300, the equivalent SPY price would be around 430.
SPY (ETF) options are American style, meaning the option owner may choose to exercise ahead of expiration. For example, this often occurs in advance of the quarterly ex-dividend date. The ex-dividend date is the first trading day when a dividend-paying stock or ETF's price drops to reflect its next dividend payment.
E-mini S&P 500 futures have been traded for more than two decades and represent one-fifth of the value of the SPX. A "multiplier" is used to calculate the notional value of a contract, which is $50 times the price of the SPX for the e-mini contract.