SPX WeeklysSM Options

SPX Weeklys - SPXW  

SPX WeeklysSM Options (SPXW)

CBOE offers SPX options with weekly expirations. SPX Weeklys options (SPXW) expire at the end of the day each Friday (PM settled) -- as opposed to the standard third Friday of the month expirations -- and may be listed with expirations of up to six consecutive weeks. Weeklys options provide opportunities to pinpoint more targeted buying, selling or spreading strategies and can help investors take advantage of market news and events.

Beginning on Monday, March 9, 2015, the trading hours for options on the SPX and SPXW (SPX Weeklys and SPX End-of-Month) begin at 2:00 a.m. Central time (Chicago time). Please visit the Extended Trading Hours webpage for more details.

SPX Weeklys - Extended

In January 2014 CBOE issued Regulatory Circular RG14-010 re: "Expansion of Number of Expirations Listed in S&P 500 Index Weeklys Options (SPXW)." The circular provides that CBOE will list out and maintain six consecutive SPXW expirations at once, not counting the current expiration.

S&P 500 Weeklys options can provide opportunities for investors to implement more targeted buying, selling or spreading strategies. S&P 500 Weeklys options can help investors efficiently take advantage of market events, such as earnings, government reports and Fed announcements.

Current listing and expiration dates are noted on Available Weeklys.

SPX Weeklys are PM-settled on the last trading day, typically a Friday. As with other PM-settled index options, the exercise-settlement value is calculated using the last (closing) reported sales price in the primary market of each component stock. On the last trading day, trading in expiring SPX Weeklys closes at 3:00 p.m. (Chicago time). All non-expiring SPX Weeklys continue to trade until 3:15 p.m. (Chicago time).

Key Features Of SPXSM WeeklysSM Options Include:

  1. Hybrid Trading System For Trading Flexibility
    • SPX Weeklys are available on CBOE's Hybrid® Trading System , which incorporates electronic and open-outcry trading in order to enable investors to choose their trading method.
  2. PM-Settlement
    • Aligns with single-stock options and ETF options and with S&P 500 options traded OTC.
    • Preferred by many investors including those with end-of-day reporting needs.
    • The ability to trade in and out of positions on settlement day.
  3. Large Contract Size With a $100 Multiplier
    • If the S&P 500 Index is at 1400, SPX Weeklys options have a notIonal size of about $140,000 (ten times larger than SPY options).
  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*

* Investors should consult with their tax advisors to determine how the profit and loss on any particular option strategy will be taxed. Tax laws and regulations change from time to time and may be subject to varying interpretations.