Are there Pros and Cons to trading SPX options instead of SPY?
- Thread starter Scataphagos
- Start date
The two biggest advantages I can see that SPX options have over SPY options is that 1) it's cash-settled at expiration and you never take physical delivery that could result in bigger losses and 2) it's a Europen option so there is no risk of early assignment against you. This is especially important if you do box spreads where you buy a bull call spread and a bear put spread at the same time otherwise this could happen to you: https://www.democraticunderground.com/100211709711
One advantage of SPX options that comes to mind is that it is possible to enter and exit a position outside of RTH. Yes, the liquidity is lower then, and the spread is wider, but if there have been major world events shaking things up overnight, it is possible to bail, or better yet, take advantage of the new dynamics:
https://ir.cboe.com/news-and-events...ns-nearly-24-hours-beginning-november-21-2021
https://ir.cboe.com/news-and-events...ns-nearly-24-hours-beginning-november-21-2021
Understood SPX is not traded as it is an index not an ETF. Options are the ONLY way to trade SPX.