Mini-SPX Index Options (XSPSM) www.cboe.com/XSP

Mini-SPX Options (XSPSM)

CBOE's mini-SPX options (XSP) offer the features of SPX options, but at 1/10th the contract size. With a manageable contract size that is a fraction of the cost of buying a basket of individual stocks, mini-SPX options allow investors to efficiently gain broad-market exposure in a single trade. In addition, mini-SPX options trade on CBOE's Hybrid Trading System, allowing investors to choose electronic or open-outcry trading.

Introduction

CBOE® offers Mini-SPX options based on the S&P 500® Stock Index.

Key features of Mini-SPX options include the following:

1. TICKER SYMBOL

  • The ticker symbol for Mini-SPX options is XSP.

2. CONTRACT SIZE

  • Mini-SPX options have 1/10th the value of the S&P 500® (SPX) Index options (e.g. if the S&P 500 Index is at 1700.00, the Mini-SPX would have a value of 170.00, and notional value covered by the Mini-SPX options (with a $100 multiplier) would be $17,000).
  • At 1/10th the size of SPX options, Mini-SPX options provide added flexibility. For example, if an investor is looking to hedge $17,000 to $150,000 of broad U.S. stock market exposure, Mini-SPX options may be helpful to investors as they work to achieve a specific desired exposure.

3. PM-SETTLEMENT

  • As of November 5, 2013, XSP options have PM settlement.
  • PM settlement aligns with single-stock options and ETF options.
  • PM settlement is preferred by many investors, including those with end-of-day reporting needs.
  • PM settlement gives investors the ability to trade in and out of positions on settlement day.
  • The last trading day for the standard XSP options generally is on the third Friday of the expiration month.

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, SPXpm and XSP, 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.

7. TRADING PLATFORM

  • Mini-SPX options trade on CBOE's Hybrid Trading System, which includes Remote Market Makers. Trading XSP options on CBOE's Hybrid Trading System offers investors a smaller-sized S&P 500 contract with the combined advantages of electronic trading and the open-outcry market on a single platform.

Volume

Updated Price Charts

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5 year % change vs. VIX Index (VIX) *