S&P 500® Index Options - PM-Settled (SPXPM) www.cboe.com/SPXPM

SPXpmSM Options

To complement CBOE's flagship SPX contract, which features AM settlement, CBOE also offers S&P 500 Index options with PM settlement. SPXpm options can be used by investors with end-of-day reporting needs, as well as those who wish to trade in and out of positions on Expiration Friday. In addition, SPXpm options trade on CBOE's Hybrid Trading System, allowing investors to choose electronic or open-outcry trading.

Beginning on Thursday, October 1, 2015, the trading hours for options on SPXpm begin at 2:00 a.m. Central time (Chicago time). Please visit the Extended Trading Hours webpage for more details.

SPXpm Transitioned from C2 to Hybrid Trading on CBOE

In February 2013 CBOE Holdings transitioned its SPXpm product from its all-electronic C2 Options Exchange (C2) to Chicago Board Options Exchange (CBOE), where it is traded on CBOE's hybrid trading model, which incorporates both electronic and open outcry trading. The migration of SPXpm from C2 to CBOE is designed with the goal of increased access and liquidity by exposing the product to an even broader user base and simplifying spread trading. CBOE's flagship SPX option, which is a.m.-settled, will continue to trade in CBOE's open outcry environment under ticker "SPX."

Key features of SPXpm options include:

  1. ELECTRONIC ACCESS
    • Point-and-click access available
  2. LARGE CONTRACT SIZE
    • 100 multiplier and a large notional size
    • Contract size is ten times larger than SPY (SPDR ETF) options making it more cost effective
  3. PM-SETTLEMENT
    • Aligns with single-stock options and ETF options
    • Preferred by many investors including those with end-of-day reporting needs
    • The ability to trade in and out of positions on settlement day
  4. CASH-SETTLEMENT, EUROPEAN-STYLE EXERCISE
    • Like SPX and most other index options, and unlike SPY and other ETF options
    • No risk of early assignment and loss of dividends, no portfolio disruption on assignment
    • CBOE Circulars (RG99-09 and RG00-171) allow SPX options to be written on a "covered" basis against SPY or IVV ETF shares in a margin account, provided the investor's brokerage firm has such policies in place
  5. Margin
    • CBOE Regulatory Circular RG15-183 notes that CBOE rules allow a short position in a cash-settled-index option established and carried in a margin account to receive covered margin treatment, if the short option position is offset in the same account by an equivalent position in an index-tracking ETF that is based on the same index that underlies the short option(s).

      In order to receive covered margin treatment, the market value of the offsetting ETF position must be equivalent or exceed the current aggregate index value of the option being covered. One should note that not all ETFs are managed so as to maintain a share price that is a constant fraction (e.g., 1/10 th, 1/100 th, 1/1,000 th, etc.) of the index being tracked.
  6. TAX TREATMENT
    • Under section 1256 of the Tax Code, profit and loss on transactions in certain exchange-traded options, including SPX and SPXpm, are entitled to be taxed at a rate equal to 60% long-term and 40% short-term capital gain or loss, provided that the investor involved and the strategy employed satisfy the criteria of the Tax Code*

Expiring SPXpm Options Cease Trading at 4:00 p.m. Eastern Time on Their Last Day of Trading

On their last day of trading, all expiring SPXpm options listed cease trading at 4:00 pm (Eastern time) / 3:00 p.m. (Chicago time). All non-expiring SPXpm options will continue to trade until 4:15 p.m. (Eastern time) / 3:15 p.m. (Chicago time). For additional information please refer to the following circular: http://www.c2exchange.com/publish/RegCir_C2/C2RG11-040.pdf.

COMPARISON OF S&P 500 OPTIONS PRODUCTS
Description Underlying Options Chain Options Root Ticker Settlement AM or PM Settlement Date* Settlement Type Exercise-Style ETH Available
SPX Options Traditional (AM-Settled on 3rd Friday of Every Month)
SPX SPX SPX AM-settled 3rd Fridays Cash European Yes
SPX Options Non-Traditional (PM-Settled on Various Expiration Dates)
SPX Weeklys SPX SPXW PM-settled Fridays Cash European Yes
SPX End-of-Month (EOM) SPX SPXW PM-settled Last Trading day of Month Cash European Yes
SPX Wednesday Weeklys SPX SPXW PM-settled Wednesdays Cash European Yes
SPXPM SPXPM SPXPM PM-settled 3rd Fridays Cash European Yes
SPX Options - Mini (1/10th the Notional Size)
Mini-SPX Index Options (Weeklys Available) XSP XSP PM-settled Fridays Cash European Yes
SPY Options - SPDR ETF
SPDR ETF Options (3rd Fridays, Weeklys and Quarterlys) SPY SPY PM-settled Fridays or End of Quarters Physical ETF American No

* In the case of a holiday on the settlement date, the settlement date is moved back one business day (e.g. from Friday to Thursday). In addition, no SPX Weekly or Wednesday Weekly will be listed that would have an expiration date that coincides with the expiration date of a traditional SPX option or EOM option.