European vs. American style options

[kny3]

Thanks for the reply. What is the exact ratio of SPY to SPX? Is it 10 to 1? It appears to be 10 to 1, but I don't want to make any assumptions. I noticed the prices aren't ever the exact same, but they are very close.

What about DJX to DIA?


Thanks,

Frank

Hey Frank 99. SPY to SPX is 10 X 1. SPX is European (which might make the prices slightly different). One other item that might cause slight difference in price could be that SPX is AM settlement, meaning you have 1 less day to trade the options(Friday morning settlement vs Friday afternoon). By the way, with SPX you also get 1256 tax treatment (60/40). Good luck.

kny 3

 

[frank99]

Thanks Kny3!

This was very useful.


Frank

Quote from kny3:

Thanks for the reply. What is the exact ratio of SPY to SPX? Is it 10 to 1? It appears to be 10 to 1, but I don't want to make any assumptions. I noticed the prices aren't ever the exact same, but they are very close.

What about DJX to DIA?


Thanks,

Frank

Hey Frank 99. SPY to SPX is 10 X 1. SPX is European (which might make the prices slightly different). One other item that might cause slight difference in price could be that SPX is AM settlement, meaning you have 1 less day to trade the options(Friday morning settlement vs Friday afternoon). By the way, with SPX you also get 1256 tax treatment (60/40). Good luck.

kny 3

 

[MTE]

Quote from kny3:

Thanks for the reply. What is the exact ratio of SPY to SPX? Is it 10 to 1? It appears to be 10 to 1, but I don't want to make any assumptions. I noticed the prices aren't ever the exact same, but they are very close.

What about DJX to DIA?


Thanks,

Frank

Hey Frank 99. SPY to SPX is 10 X 1. SPX is European (which might make the prices slightly different). One other item that might cause slight difference in price could be that SPX is AM settlement, meaning you have 1 less day to trade the options(Friday morning settlement vs Friday afternoon). By the way, with SPX you also get 1256 tax treatment (60/40). Good luck.

kny 3

Also, SPY is an Exchange-traded fund that is designed to replicate the perfomance of SPX less management fees so the two won't be exactly indentical.

XSP is the mini-SPX - i.e. 1/10th the size, with the rest of the contract specs identical to SPX.