When will SPY split?

[Spaghetti Code]

With more and more retail traders piling in, and S&P climbing higher and higher, when will SPY split? Not all brokerages support partial shares, and it's hard for many people to muster up the cash to even buy one share. On the flip side, SPY being high means there's a lot of leftover cash that can't be effectively moved in.

Additionally, options on SPY are getting close to a notional $40K amount, which is debilitatingly high. Regular people can't afford to execute the option at expiration. It seems like if CBOE and brokers want to keep charging high fees per contract, they would prefer people to trade smaller and more frequently.

So, when will SPY split?

 

[ajacobson]

For what it's worth it would up to the issuer SSGA and they get paid on assets. Options trade on all 16 option exchanges, the cash trades on pretty much every venue in the US and it's generally 100,000 shares up in the upstairs market. So it kinda ain't broken and lots of users prefer the current size. BOX even lists a jumbo 10X to align with the SPX, but BOX has very little share.

 

[Spaghetti Code]

For what it's worth it would up to the issuer SSGA and they get paid on assets. Options trade on all 16 option exchanges, the cash trades on pretty much every venue in the US and it's generally 100,000 shares up in the upstairs market. So it kinda ain't broken and lots of users prefer the current size. BOX even lists a jumbo 10X to align with the SPX, but BOX has very little share.

That may be, but there are already big notional instruments for trading S&P, why does SPY have to be a big notional one too? If SPY doesn't serve the small time trader market, what does?

 

[ajacobson]

BOX has very little share of everything. Think of an institution that won't interact with payment and is paying a couple of cents a share. You double their cost if you split it. Look, every customer is important, institutions dominate. Generally the largest option exchange (excluding the SPX) is PHLX which has a fee cap and does tons of crosses. When they start asking for a split - sit up and pay attention.

 

[maxinger]

and when will Bitcoin futures split?

 

[Spaghetti Code]

BOX has very little share of everything. Think of an institution that won't interact with payment and is paying a couple of cents a share. You double their cost if you split it. Look, every customer is important, institutions dominate. Generally the largest option exchange (excluding the SPX) is PHLX which has a fee cap and does tons of crosses. When they start asking for a split - sit up and pay attention.

Exchanges win on split, and institutions lose it sounds like you are saying. Why should one be favored over the other?

In the case of PHLX, the fee cap would hurt them, since they cannot extract more fees from the higher amount of trading? I'm not sure I understand. As for the crosses, Wouldn't a lower price make it easier to match up the trades, since the prices would be clustered together more? Lastly: when do exchanges publicly start talking about splits? I feel like I only hear about them after they have been announced.

 

[zghorner]

easiest solution to not being able to buy an entire share of SPY...

 

[Spaghetti Code]

easiest solution to not being able to buy an entire share of SPY...

Very funny, but that ends up being the solution to every question. This thread is really more about understanding what forces are for and against splits, and when do these forces outweigh the other.

hink of an institution that won't interact with payment and is paying a couple of cents a share. You double their cost if you split it.

Thinking about this more: why did TQQQ split recently then? Or SQQQ? Both of them have comparable volume, but institutional cost didn't stop their forward and reverse splits.

 

[destriero]

Top ten dumbest thread on ET (historically). If you can't afford $400 to buy a share of SPY then you have no business investing. Add to that the issue with tracking with the big.

Troll somewhere else.

 

[destriero]

Additionally, options on SPY are getting close to a notional $40K amount, which is debilitatingly high.

WTF does that even mean? One contract of the synthetic is 100 shares. WTF are you talking about the synthetic when you can buy a single share for <$400? Seriously, is this thread a joke or is something wrong with you?