Benefits of Index

The Guard Rail Of
European Style

Index options are European-style, which means they can be exercised only at expiration. Stock and ETF options, in contrast, are American-style. They can be exercised at any time before expiration.

Make European Exercise Style work for you

European-Style Options

  • The option holder has the right to exercise the option only at expiration.
  • The risk of early assignment is eliminated.
  • Traders can implement hedging strategies with more confidence.

American-Style Options

  • The option holder has the right to exercise the option at anytime.
  • You'll have to monitor option prices. If an option is in the money, you can get assigned.
  • It's riskier to implement hedging strategies since you can be assigned at any time.

No unexpected assignment surprises

If you've followed the stock market for a while, you know anything unexpected can happen. Negative news, management changes, dividends, and more can cause significant price changes to the underlying assets.

If you trade European-style index options, these surprises won't arise because there's no risk of assignment before the index option's expiration date.

Take dividends, for example. Suppose you sold a call option on a stock. The owner of that call option isn't entitled to any dividends, so before the ex-dividend day, the call owner may exercise the contract. As the option seller, you might be surprised by an assignment notice. You'll be forced to liquidate your position at the strike price.

Lapping The Competition:
Benefits Of Index Options

Your first thought might be, "But can't you do that with stock or exchange-traded fund (ETF) options?" You can, but index options come with unique benefits that differ from equity and ETF options and that are worth exploring.

Why Trade Index Options?

Crossing the Finish Line:

The Checkered Flag

Download our free guide to learn more about the potential benefits of index options and why you may want to consider them as part of your trading strategy.

SPX Product Suite Comparison

Cboe Index Options ETF Options
NanosSM Mini-SPX (XSP®) SPX ® Versus SPDR ETF (SPY)
1/100th of XSP 1/10th of SPX 1 Contract Size 1/10th of SPX
$1 $100 $100 Contract Multiplier $100
$450 $45,000 $450,000 Approx. Notional Size
(if S&P 500 is $4,500)
Trading account credited or debited in cash Settlement Type Delivery of underlying shares
European style, exercised at expiration, no risk of early exercise or assignment
Exercise Style American style, can be exercised or assigned prior to expiration
Capital gains may benefit from 60% / 40% tax treatment* Tax Treatment Standard short- and long-term tax rules
Standard market trading hours Global trading hours available** Extended Trading Hours Standard market trading hours
Settlement and exercise style eliminate potential economic and tax risk for writers Certainty of Settlement After market contract assignment may result in unplanned residual positions

Cboe Index Options Quick Links

*Under section 1256 of the IRS tax code, profit and loss on transactions in certain exchange-traded options, including SPX options, are entitled to be taxed at a rate equal to 60% long-term and 40% short-term capital gain or loss, provided that the investor involved and the strategy employed satisfy the criteria of the tax code. Investors should consult with their tax advisors to determine how the profit and loss on any particular option strategy will be taxed. Tax laws and regulations change from time to time and may be subject to varying interpretations.

**Global Trading Hours (GTH). The trading hours for options on the SPX, SPXW (SPX Weeklys and SPX End-of-Month), and XSP (Mini-SPX) begin at 8:15 p.m. Eastern time and end at 9:15 a.m. Eastern time. Please visit the Hours & Holidays page for more details. Options involve risks and are not suitable for all investors. Before trading options, you should discuss with your broker whether trading options is right for you and review the Characteristics and Risks of Standardized Options (or Options Disclosure Document) regarding risks associated with trading options. There are important risks associated with transacting in any of the Cboe Company products or any of the digital assets discussed here. Before engaging in any transactions in those products or digital assets, it is important for market participants to carefully review the disclosures and disclaimers detailed at These products and digital assets are complex and are suitable only for sophisticated market participants. These products involve the risk of loss, which can be substantial and, depending on the type of product, can exceed the amount of money deposited in establishing the position. Market participants should put at risk only funds that they can afford to lose without affecting their lifestyle.