SPY vs. SPX Options: Major Differences You Should Know

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Contributor, Benzinga
May 26, 2023

The S&P 500 is a market index that follows the 500 largest companies in the stock market. You can invest in the S&P 500 and instantly have a diversified portfolio. Some traders prefer to get exposure to the S&P 500 through options like SPY and SPX. A good options trading broker can help you get started, tap into the best strategies and save on fees. This article will give you a foundation for how these options work so you can craft your trading strategy.

What Are SPY Options?

SPY options let traders take bullish or bearish positions on derivatives that respond to price movements from the S&P 500. A long call is bullish and gains value from price increases to the S&P 500, while a long put is bearish. You can also enter a bullish position with a short put and a bearish position with a short call. 

Before trading SPY options, it’s important to know what SPY actually is. SPY is an exchange-traded fund (ETF) that mirrors the S&P 500’s performance. While you are technically trading an ETF instead of an index, the ETF performs just like the renowned index. 

What Are SPX Options?

SPX options give you direct exposure to the S&P 500. You don’t have to worry about how an ETF’s fees impact the underlying stock’s price. SPX options give you exposure to the S&P 500 index fund instead of an ETF that mimics the index’s performance. 

10 Major Differences Between SPY and SPX Options

SPY and SPX give you exposure to the S&P 500, but these options have key differences you should know before getting started.

Paying Dividends

SPX does not pay a dividend, but SPY does. Dividends may not seem relevant because someone buying options does not own shares. You only receive the dividend if you own the shares before the ex-dividend date. 

But the dividend is relevant for options traders. Some traders may exercise SPY options early to be on time for the dividend. An ex-dividend also lowers the stock price, which will affect your option’s value. If SPY offers a $1.60 dividend this quarter, SPY’s share price will decrease by $1.60 on the ex-dividend date. Options do not get adjusted downward proportionally to the ex-dividend, but a decrease in share price hurts calls and helps puts. 

Trading Style

Traders can use two approaches for their options trading. SPY options use the American style of option trading, while SPX options use the European trading style.

Investment Cost

Several factors influence an option’s cost, including the underlying asset’s price. Because the S&P 500 is roughly 10 times the price of SPY, the options for SPX require a higher investment. An investor would have to purchase 10 SPY calls with $400 strike prices to get the same exposure as one SPX call with a $4,000 strike price.

Settlement Price

If a SPY option gets exercised, shares exchange hands. A call holder will receive 100 shares, while someone with a put can sell their 100 shares. Instead of letting traders exchange shares, SPX options involve cash. SPX options give traders the cash equivalent of their in-the-money profits plus the initial investment. If the option expires worthless, the trader gets nothing back.


SPY options follow the American trading style, which means options expire on Fridays at 4 p.m. Eastern. Some ETFs like SPY have multiple expiration dates each week, but most stocks expire after Friday’s close. 

SPX options follow a different model, the European trading style. Most European options also expire on Friday’s close, but the third Friday of each month presents an exception. Options that expire on the third Friday don’t benefit from Friday’s price movements. These options stop trading after Thursday’s close. You cannot exercise a SPX option and have to wait for the settlement date to receive cash (SPX options do not involve shares changing hands), but you can exercise a SPY option at any time.


Options traders can only get involved with two types of contracts: calls and puts. These derivatives enable various options trading strategies you can use for SPY and SPX options. Both options let you engage in calls and puts.


SPX options hold a higher value than SPY options because of the difference in share prices. A trader needs 10 SPY options to have the same value as one SPX option. While SPX options hold more value per contract, they both produce similar returns. If the S&P 500 increases by 1%, the SPY will also increase by roughly 1%. A 1% increase in the underlying asset’s price will produce nearly identical percentage gains for SPX and SPY options.


SPX and SPY both have great liquidity. They are among the most in-demand options, with generous bid-ask spreads. Other options with less liquidity have wider spreads, which makes it more difficult to realize profits. If you want to quickly enter and exit options within seconds without getting burned by the spread, SPY and SPX options are great choices.

Tax Treatment

SPX options are better for taxes and can help you save money because of how capital gains work. Sixty percent of your gains from SPX options get treated as long-term capital gains, while the remaining 40% of gains are treated as short-term gains. SPY options do not have the same luxury because all of their gains get treated as short-term gains. Short-term gains get taxed at a higher level than long-term gains, so you can end up with a higher tax bill if you trade SPY options.


SPY and SPX both have more flexibility than other options. While many options only expire on Fridays, you can trade SPY and SPX options that expire on any weekday. You can trade days to expiration (DTE) and zero days to expiration (0DTE) options on any day of the week if you desire. While each options trader has their own risk tolerance, SPY and SPX options offer the greatest flexibility to meet your needs. 


SPY and SPX options both offer great liquidity, flexibility and the potential for high returns. Traders can enter and exit positions with expiration dates throughout the week. You don’t have to limit yourself to trading options that expire on Fridays. SPY and SPX options offer many perks, but traders should assess the differences covered earlier before deciding which options make more sense for them.

Frequently Asked Questions


Is it better to trade SPY or SPX options?


Both options mirror the S&P 500, but SPY is better for getting started. SPX is better for capital gains taxes.


Does SPX move the same as SPY?


There might be small variances, but if SPX increases by 1%, SPY is likely to increase by 1% as well. Any differences in performance should be minimal.


What are the best times to trade SPY and SPX?


That depends on the trader. Some traders thrive during earnings reports, while others prefer trading with less volatility.