How to Trade SPX Options on tastytrade
Cboe index options give traders a way to gain exposure to a broad market benchmark through a single contract rather than assembling a basket of individual stocks. SPX options are among the most actively traded of these Cboe index options, and tastytrade supports options trading on SPX alongside its related products XSP, VIX, and RUT.
This article covers what SPX options are and walks through how to trade SPX options on the tastytrade platform, from opening the options chain to submitting an order.
What Are SPX Options?
SPX options are index options based on the S&P 500. Unlike single-stock options, an SPX contract doesn't convert into shares of any underlying company. Instead, it settles in cash based on the index's value. This makes SPX one of the more structurally distinct products available for index options trading.
Cash Settlement and European-Style Exercise
SPX options are cash-settled options, meaning an in-the-money contract at expiration results in a cash debit or credit rather than a stock position. SPX options are also European-style, so they can only be exercised at expiration — not at any point before, as with most single-stock (American-style) options. Together, these two features remove early assignment risk that exists with American-style equity options.
60/40 Tax Treatment for Index Options
Certain index options, including SPX, qualify as Section 1256 contracts, which may receive 60/40 tax treatment — 60% of gains or losses taxed at the long-term capital gains rate and 40% at the short-term rate, regardless of how long the position was held. tastytrade does not provide tax advice, and traders should consult a qualified tax professional about how this applies to their individual situation.
How to Trade SPX Options on tastytrade
Once logged in to a tastytrade account, placing an SPX options trade follows the same basic order flow as other products on the platform, with a few index-specific details to watch for along the way.
How to Trade SPX on tastytrade video provided by Cboe.
Step 1: Find SPX in the Options Chain
From the trading screen, type SPX into the symbol search and select it from the results. This opens the Trade tab and loads the SPX options chain, where available expirations and strike prices for S&P 500 index options appear.
Step 2: Choose an Expiration Cycle
SPX offers a range of expiration cycles, including several expirations within the same week. Click an expiration to expand it and view the available strike prices for that cycle.
Step 3: Select Contracts from the Options Chain
There are two ways to build a position from the options chain SPX displays: use the strategy menu to select a defined structure, such as an iron condor or vertical spread, or click directly on a bid or ask price in the table to buy or sell a specific contract. Either method populates the order ticket.
Step 4: Review the Trade with Analysis (Optional)
Before submitting an order, the Analysis tool shows a payoff diagram for the position's theoretical profit and loss. Traders can drag the position across different underlying prices, or adjust date, theoretical spot price, and implied volatility inputs to see how the trade's theoretical P&L might respond under different market conditions. This step is optional and does not predict how the trade will actually perform.
Step 5: Review Order Details Before Sending
Select Review & Send to confirm order details before submission, including estimated trade cost, buying power effect, and maximum profit and maximum loss where applicable. This is also the point to review commissions & fees for the order — tastytrade options pricing runs $1.00 per contract to open and $0 to close. Current rates are always available on the pricing page.
Step 6: Submit and Monitor the Position
Once reviewed, select Submit. After confirmation, the position appears in the Positions or Orders tab, where it can be tracked and managed going forward.
Other Cboe Index Options Available on tastytrade
SPX is one of several Cboe-listed index options tastytrade supports. XSP (a mini version of SPX at 1/10th the size), VIX, and RUT are also available, and all four currently trade during tastytrade's Global Trading Hours extended session in addition to standard hours. Learn more about Premarket, Extended Hours & 24 Hour Trading.
FAQs
SPX options are cash-settled, European-style index options based on the S&P 500. They settle in cash rather than converting into shares of any underlying stock and can only be exercised at expiration.
Yes. SPX options settle in cash at expiration based on the index value, rather than resulting in a stock position, since there is no single underlying company to deliver shares of.
Certain index options, including SPX, may qualify as Section 1256 contracts, receiving 60% long-term and 40% short-term capital gains treatment regardless of holding period. Consult a tax professional to determine how this applies to your situation.
Type SPX into the symbol search box on the trading screen. This loads the SPX options chain, showing available expirations and strike prices.
SPX is one of the products eligible for tastytrade's Global Trading Hours extended session.
Options involve risk and are not suitable for all investors, as the special risks inherent to options trading may expose investors to potentially significant losses. Please read Characteristics and Risks of Standardized Options before deciding to invest in options. Cboe Exchange, Inc. and tastytrade, Inc. are separate and unaffiliated companies. tastytrade does not provide investment, tax, or legal advice. All investments involve risk of loss, and traders are solely responsible for evaluating the risks associated with their own trading decisions.