SPX vs SPXW Options — What’s The Difference?

SPX vs SPXW Options Underlying Symbol

As new options traders begin to learn about index options, the historic confusion regarding SPX vs SPXW options is something almost all traders will run into. The underlying symbol (or root ticker) for both SPX and SPXW options is SPX, the symbol for S&P 500 index. This means that at your broker’s website or using the Market Data API or Sheets Add-on, you would use the symbol SPX to consult the entire option chain. If you are using Google Finance to find the SPX ticker, the symbol is slightly different. The difference in the option symbol indicates the settlement differences in the contracts themselves and this is what can create confusion for investors trading SPX options for the first time.

For example, on Feb 17, 2023 there are two $4000 call options: SPX230217C04000000 and SPXW230217C04000000. The slight differences in these two contracts’ settlement are explained below:

SPX vs SPXW Options Settlement

SPX options are AM-settled options that expire monthly on the third Friday. SPXW options are weekly (and daily) 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 SPX 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.

Frequently Asked Questions

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

Why do SPX options use both SPX and SPXW 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, such as the use of SPXW for weekly options. In reality, the SPX today has expirations on an almost daily basis, but the SPXW root symbol is still used.

What is the tax treatment for SPX vs SPXW options?

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

What does it mean that SPX is a “European-style” option?

Since both SPX and SPXW options are European-style options, this means they are cash-settled at the expiration date and cannot be exercised early. At expiration time, you don’t actually take delivery of any underlying security. Instead, you are paid (or forced to pay) the difference between the option’s strike price and the underlying index. This is different from SPY options, for example, where the underlying ETF is actually transferred between option-holders at expiration.