What Are SPX Options?

Understanding SPX Options

Definition: SPX options are option contracts that let traders speculate on the performance of the S&P 500 without buying individual stocks. They are European-style and cash-settled, which means no shares change hands at expiration.

Key Characteristics

• Cash-Settled: Profits or losses are settled in cash at expiration. No shares to deliver.
• Expiration & 0DTE Focus: SPX offers frequent expirations. At SPX Option Trader we trade SPXW (weeklys) on expiration day (0DTE) to avoid overnight risk.
• High Liquidity: Day after day we’ve found SPX options to be reliably liquid, even when markets move fast. That liquidity gives us the confidence to enter and exit quickly when it matters most.

Benefits of Trading SPX Options

• Broad Market Exposure: One position provides exposure to the overall U.S. equity market.
• Leverage with Flexibility: Control meaningful index exposure with comparatively small capital, when used with discipline.
• No Dividend Complications: Index options remove single-stock dividend timing from the equation.
• Potential Tax Advantages (U.S.): SPX index options receive Section 1256 treatment (60% long-term / 40% short-term). Consult a tax professional for your situation.

Risks of Trading SPX Options

• Market Risk: The S&P 500 can move sharply. Without a plan, losses can accumulate quickly.
• Time Decay: Time decay is always a factor in options, but with 0DTE it’s like sand running through an hourglass at double speed. If the market doesn’t move quickly in your favor, the premium can vanish in minutes.
• Complexity: Pricing reflects volatility, time, strike, and market conditions. New traders often underestimate this.
• Liquidity Shifts: Around major news, spreads can widen and exits become harder.

Note: Even with strong long-term performance published since 2016, SPX options are not suitable for everyone. Risk management comes first.

How We Trade SPX 0DTE Options

• Broker & Platform: To trade SPX options, you’ll need a brokerage that supports index options and offers strong execution tools. Many of our members use Schwab, Interactive Brokers, Tradier, E-Trade, or Tradestation. In our own trading, we rely on Schwab’s Thinkorswim platform, which has been reliable and well-equipped for the speed of 0DTE trading.
• Pricing & Volatility: We constantly watch volatility and option premiums. Some days contracts are simply too expensive to justify. On those days, discipline is choosing to sit out rather than force a bad trade.
• Our Strategies: We have four proprietary strategies tailored for 0DTE options. These strategies have been refined through thousands of live trades since 2016. They are designed not only to capture moves but also to protect capital when conditions turn against us.
• Risk Management: Position sizing, predefined exits (including trailing stops), and not trading on unfavorable days are built into our process.

Timing and Discipline in 0DTE Options

During a session in August of 2025, our Late Day Trader strategy captured a +543% move in under 15 minutes in a single trade. Then we had no trades for the next two sessions. That trade was exciting, but what mattered just as much were the two days that followed when we didn’t trade at all. It’s a lesson we drill into members: opportunity matters, but discipline, especially knowing when not to trade, is what keeps you in the game long term.

Quick Answers About SPX Options

• Are SPX options the same as SPY options?
  No. SPX options are based on the S&P 500 index and are cash settled. SPY options are on the SPY ETF and involve shares of the fund. SPX contracts are larger and typically cost more.
• Do SPX options expire daily?
  Yes. SPX weekly options (SPXW) have expirations every trading day, which is why they are often used for 0DTE strategies.
• Are SPX options cash settled?
  Yes. At expiration, any profit or loss is settled in cash. No shares are delivered.
• Do I need a margin account to trade SPX options?
  Not necessarily. You can trade SPX options in a cash account if your broker has approved you for options trading. Margin is required for spread strategies.
• What are the key risks?
  Fast time decay, sharp market moves, and the possibility of losing the full premium on a trade. Keep position size small and use predefined exits.

Conclusion

SPX options give traders leverage, flexibility, and access to the entire market in a single trade. They are not magic. Success requires education, planning, and discipline. For us, SPX index options are not just another product. They are the core of what we have traded and published in real time since 2016, and we have seen firsthand both the potential and the risks.