Benefits of XSP Options
- Cash Settlement & European Exercise
- Trading account credited/debited in cash, not ETF shares, and no risk of early assignment
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- 60/40 Tax Treatment
- Capital gains may benefit from 60/40 tax treatment*
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- Mini Contract
- Greater flexibility with smaller contracts.
$2700 SPX = $270 XSP
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- Covered Margin Treatment
- Offset SPY or IVV ETF exposure on a "covered" basis in a margin account**
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Currently Trading S&P 500 ETF Options?
It's Time to Go Mini
Comparing Cboe Minis – XSP and MRUT
The Cboe Mini-Russell 2000 Index option contract, known by its symbol MRUT, is an index option product designed to track the underlying Russell 2000 Index. This chart shows MRUT compared to XSP, an index option product designed to track the underlying S&P 500 Index.
XSP options trade on Cboe's Hybrid Trading System, which provides investors with the combined advantages of electronic trading and an open-outcry market on a single platform. XSP options also trade on the BZX exchange.
Comparison of S&P 500® Index Products
|Description||Mini-SPX® Index Options||SPX® Index Options||SPDR® S&P 500® ETF Options|
|Root Ticker Symbol||XSP||SPX||SPY|
|AM or PM Settlement||PM-settled||AM-settled (Weeklys and End-of-Month PM-Settled)||PM-settled|
|Monday, Wednesday, Friday Weekly Expirations||Yes||Yes||Yes|
|Settlement Type||Cash||Cash||Physical Shares of ETF|
XSP Weekly Options
Whether it's trading around specific events, such as earnings announcements or economic data reports, or executing overwriting or spread-trading strategies, Cboe XSP weekly options allow traders the granularity to more closely tailor their trades to meet their needs. And for traders executing premium collection strategies, XSP weekly options provide the opportunity to collect premium 52 times per year rather than 12.
XSP weekly options are offered with Monday, Wednesday, and Friday settlements. For Friday settlements, options contract expirations occur on non-standard Friday expirations throughout the year. Similarly, Monday and Wednesday XSP Weeklys options settlements may expire on any Monday or Wednesday of the month, other than a Monday or Wednesday that coincides with an end-of-month expiration date.
XSP Monday, Wednesday and Friday Weeklys options are typically listed on Friday, Tuesday and Thursday, respectively and will expire on their expiration date. If a standard or EOM options contract settlement exists in a week that coincides with a typical Weekly expiration date, a Weekly expiration will not exist on that expiration day. (The term Weeklys refers to the fact that the contracts are listed every week, not that they are a seven-day contract). Settlement processes for XSP weeklys are the same as their standard options counterparts (index, ETF, etc.). See the contract specification for more information.
*Under section 1256 of the Tax Code, profit and loss on transactions in certain exchange-traded options, including 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.
** 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 or greater position in an index-tracking ETF that is based on the same index that underlies the short option(s) and provided the investor's brokerage firm has such policies in place.