It’s a real thrill for me to make traders aware of all of our products here at CBOE. So when someone asked me what’s the rage about these SPXpm options I was delighted to tell him all about this new contract.
This past October, C2 Options Exchange began electronically trading S&P 500 Index options with the symbol SPXpm. Here are a few of the key features of the SPXpm option:
SPY traders like the capability of trading all day on expiration with settlement being the closing print. SPXpm option traders enjoy that same capability. But SPY is 1/10th the size of the S&P 500 and the SPXpm option is the full size contract. So with the same outlay of money you would actually carry the same risk/reward but trade fewer contracts for a significant savings in commissions.
Unlike SPY options which settle in shares and have an American Style exercise, SPXpm options are cash settled with a European Style Exercise so there is no risk of early assignment for those who enjoy trading credit spreads. Nobody likes a portfolio disruption with an early exercise.
Shorter term SPXpm option trades receive a 60-40 tax treatment. Profit and losses are treated as 60% long term and 40% short term providing the investor meets the 1256 Tax Code criteria.
For more information on SPXpm options, please visit www.cboe.com/spxpm