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.

Conversion of SPXPM options to Symbol SPXW

CBOE is planning a change to the symbol for existing SPXPM option series to option symbol SPXW in both the Regular Trading Hours (RTH) and Extended Trading Hours (ETH) session. The change is scheduled to be effective May 1, 2017, pending regulatory approval.

IMPORTANT: After the conversion, on standard expiration dates (i.e., generally the third Friday of the month), both AM-settled options trading under symbol SPX and PM-settled options trading under symbol SPXW, both of which have the same underlying SPX index, will expire and be settled. The settlement symbol for the AM-settled SPX options will be “SET”; settlement for the PM-settled SPXW options is based on the official SPX closing price on the expiration date.

For more details, see CBOE Regulatory Circular RG17-002.

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
DescriptionUnderlying Options ChainOptions Root TickerSettlement AM or PMSettlement Date*Settlement TypeExercise-StyleETH Available
SPX Options Traditional (AM-Settled on 3rd Friday of Every Month)
SPX SPXSPXAM-settled3rd FridaysCashEuropeanYes
SPX Options Non-Traditional (PM-Settled on Various Expiration Dates)
SPX WeeklysSPXSPXWPM-settledFridaysCashEuropeanYes
SPX End-of-Month (EOM)SPXSPXWPM-settledLast Trading day of MonthCashEuropeanYes
SPX Wednesday WeeklysSPXSPXWPM-settledWednesdaysCashEuropeanYes
SPXPM**SPXPMSPXPMPM-settled3rd FridaysCashEuropeanYes
SPX Options - Mini (1/10th the Notional Size)
Mini-SPX Index Options (Weeklys Available)XSPXSPPM-settledFridaysCashEuropeanNo
SPY Options - SPDR ETF
SPDR ETF Options (3rd Fridays, Weeklys and Quarterlys)SPYSPYPM-settledFridays or End of QuartersPhysical ETFAmericanNo

* 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.

** CBOE is planning a change to symbol SPXPM, as noted above. Details are on CBOE Regulatory Circular RG17-002.