Few comments:
Liquidity:
SPY has very "tight" bid/ask spreads. This helps planning because one has a pretty could idea of the execution price. It also enables the use of market orders which are easier and can execute much quicker than limit orders.
SPX, on the other hand, has a relatively wide bid/ask spread when compared to SPY. This means that limit orders are a must. That means some "bargaining" with the price and much slower execution. It is more time intensive, less precise and one never really knows if they received the best price.
Some traders prefer ETFs like SPY or IWM due to better liquidity. What they often forget is the fact that Index options are 10 times bigger product, so 20 cents spread on SPX is equivalent to 2 cents spread on SPY. For example, spread of 10.00/10.50 on SPX would be equivalent to 1.00/1.05 on SPY. The slippage on SPX is usually no more than 10-15 cents which is 1-1.5 cents on SPY.
Commissions:
Buying less contracts means a significant difference in commissions. For example: if you buy one lot of 10 strike SPX Iron Condor, you will trade 8 round trip contracts. At $1/contract, that's $8 or 0.8% of the $1,000 margin. Buy 10 lots of 1 strike SPY Iron Condor - and the commissions jump to $80 or 8% of the $1,000 margin.
Tax Treatment Differences:
SPX tax treatment is significantly better than SPY. SPY has an advantage in LEAPS, but from a practical point of view, it can't even come close to the advantages offered SPX. Remember, it's not what you make it's what you keep that matters.
