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ndx vs ndxp
Last Update: March 1, 2024

NDX vs NDXP Options — What’s The Difference?

Learn all about the differences in NDX vs NDXP options contracts and determine which contracts are best for you.

NDX vs NDXP Options Underlying Symbol

There are a variety of Nasdaq options based on the Nasdaq-100 Index. By far the most popular chains are the NDX and NDXP chains, which are the original option chains for the Nasdaq. The underlying symbol for both these options chains is the Nasdaq-100 (NDX). When you’re using most broker platforms, the Market Data API, or our Sheets Add-on, you’ll be looking up the option chain using NDX, the underlying index symbol. The difference in the option symbol indicates slight settlement differences in the option contracts themselves.

Do not confuse NDX with the Nasdaq Composite (which is usually listed with the symbol IXIC or COMP). Remember, NDX includes only the 100 largest Nasdaq companies by market cap, while the Nasdaq Composite includes all companies that trade on the Nasdaq.

For example, on Thursday March 14, 2024 a $17,500 call for NDX has the symbol NDXP240314C17500000. The next day on March 15, 2024 (the 3rd Friday of March), the $17,500 call has the symbol NDX240315C17500000. Besides the different dates, the slight differences in settlement for these two contracts are as follows:

NDX vs NDXP Options Settlement

NDX options are AM-settled options that expire monthly on the third Friday. NDXP options are daily, weekly, and quarterly options that expire after market close (PM-settled). On the AM-settled options, the last day of trading is the Thursday before the expiration date. These options will use Friday’s opening price for settlement. On the PM-settled options, you can trade them up until the market closes on expiration day. They’ll use the closing price for settlement. This means the AM-settled NDX options have some additional overnight volatility on the last trading day. This can be positive or negative, depending on the trading strategy you are employing.

Last Trading Day Day Before Expiration Day of Expiration
Settlement Time AM (Opening Price) PM (Closing Price)
Tradable on Expiration Day No Yes
Settlement Date Third Friday of the Month Monday – Friday
Trading Hours 9:30 AM – 4:15 PM ET 9:30 AM – 4:15 PM (normal days)
9:30 AM – 4:00 PM (day of expiration)
Settlement Symbol XQO XQC

Frequently Asked Questions

Here are some FAQs that may help gain an additional understanding.

Why do NDX options use both NDX and NDXP as root symbols?

This is mainly a holdover from before the 2010 symbol change. The OCC changed all option symbols in 2010 to the format used today and some of the previous conventions were preserved.

What is the tax treatment for NDX vs NDXP options?

Both NDX and NDXP options are considered Section 1256 contracts and have advantageous capital gains tax treatment in the United States. This is not the same with QQQ options. However, there is no difference between NDX and NDXP when taxes are concerned. Both will provide advantageous capital gains treatment.

What does it mean that NDX and NDXP are “European-style” options?

Given that NDX and NDXP options are European style, they are settled in cash upon reaching their expiration date, prohibiting any possibility of early exercise. Upon expiration, holders do not receive any actual underlying assets. Rather, the settlement involves the payment or receipt of the difference between the strike price of the option and the value of the underlying index. This contrasts with the handling of QQQ options, where the expiration leads to the physical exchange of the underlying ETF among the holders of the options.

What are the settlement symbols for NDX and NDXP?

Settlement symbols are used to inform the official closing price of the index for the purposes of reconciling the cash-payments between option buyer and option seller. For NDX options use the XQO ticker to obtain the AM settling price of the NDX index. For NDXP options, use the XQC ticker to obtain the PM settling price of the NDX index.

Why do NDX and NDXP use settlement symbols instead of the open/close prices of the index?

Why don’t they just use the index opening/closing prices? The answer is that the option contract itself calculates opening and closing prices differently than the index itself. It is annoying, but since they do it that way, the settlement symbols are necessary if you take an option through expiration and you want to know how much you’re getting paid (or have to pay).

Here’s the official document from Nasdaq about this on NDX (AM-settled) options:

The Index Option Settlement Value (“Settlement Value”) calculation is based on the timing of when each component security in an Index is officially opened by the listing market and is not the same as the first calculated index value which is disseminated at 09:30:15 a.m. ET. It is possible and likely that the Settlement Value will differ substantially from the first disseminated index value and/or the previous day’s closing index value.

Are NDX options riskier to hold through to expiration than NDXP options?

Yes. Since NDX options stop trading Thursday afternoon, but settle Friday morning, they include overnight risk. You must stop trading them on a Thursday, but the settlement price is based on Friday’s opening price. Big news on Thursday night or Friday morning could easily swing the price. This is why out of the money NDX options will still hold some extrinsic value on Thursday afternoon, while NDXP options lose all their extrinsic value on their expiration date. Whether this is bad or good for you will depend on your trading strategy.

Do other indices use modified root tickers like the Nasdaq 100 for their options?

Yes, the S&P 500 uses SPX and SPXW for their options, while the Russell 2000 uses RUT and RUTW. These options work much the same way as NDX and NDXP, with the standard index root ticker being used for the monthly/AM expirations while the SPXW and RUTW root tickers are reserved for weekly/PM expirations.

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