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 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.
An additional advantage of trading SPX and futures options is the tax benefit. They qualify for special treatment under the Internal Revenue Code, where gains or losses from these contracts can be classified as 60% long-term capital gains and 40% short-term capital gains regardless of the holding period.
*Global Trading Hours (GTH) The trading hours for options on the SPX, SPXW (SPX Weeklys and SPX End-of-Month), and Mini-SPX (XSP) begin at 8:15 p.m. Eastern time and end at 9:25 a.m. Eastern time. Please visit the Global Trading Hours page for more details.
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.
Day trading SPY options is a very good opportunity in the market for traders that don't have the time to look at multiple different tickers throughout the day or to analyze them.
Trade SPX Options That Are Not Day Trades
For example, you can hold SPX options positions overnight or trade spreads that are opened and closed on different days. This way, you reduce the number of trades counted as day trades, avoiding the PDT designation.
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.
Are you a fan of trading options on the SPX, VIX, and many other popular CBOE products? If so, these are proprietary products, meaning that they only trade on one exchange–the CBOE, and are subject to an additional fee when opening and closing a trade.
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.
S&P 500 Monthly Return is at -2.50%, compared to 5.73% last month and 4.42% last year. This is lower than the long term average of 0.58%.
Since SPY options have tighter markets, they are known to be more liquid than SPX options. SPY options usually feature a tighter speed between their bid and offer than SPX options making them more price efficient for traders and investors.
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.
In the past year, QQQ returned a total of 24.57%, which is slightly higher than SPY's 23.53% return. Over the past 10 years, QQQ has had annualized average returns of 18.38% , compared to 13.08% for SPY. These numbers are adjusted for stock splits and include dividends.
Everyday investors can use SPY to manage risk in ways only institutional traders could access previously. Buy and hold SPY in a portfolio to potentially capture long-term growth. As the world's most liquid ETF,1 SPY can help you get in and out of the market fast, easily, and at a relatively attractive cost.
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.
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.
The Sebi report reveals a shocking reality: 93 per cent of traders in the futures and options (F&O) segment lose money. Even more surprising is that these traders keep returning to the market, much like moths drawn to a flame.
Unlike SPY, which is an ETF, SPX represents the actual index itself and cannot be directly traded. Instead, investors can trade options contracts based on the SPX index.
Why Do I Have to Maintain Minimum Equity of $25,000? Day trading can be extremely risky—both for the day trader and for the brokerage firm that clears the day trader's transactions. Even if you end the day with no open positions, the trades you made while day trading most likely have not yet settled.
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.
Index Top Holdings as of Jan 10 2025
Apple Inc. Amazon.com Inc. Tesla Inc. Broadcom Inc.
SPX is also European-style, meaning there is no assignment risk before expiration.