Cboe S&P 500 Equal Weight Index Options

Broader Exposure, Greater Flexibility

S&P 500 Equal Weight Index options provide exposure to all S&P 500 companies equally weighted at 0.2%. Based on 1/10th the value of the S&P 500 Equal Weight Index, these cash-settled, AM (SPEQX) and PM (SPEQW) settled, European-style options maintain the same trading mechanics and tax benefits as SPX options while offering unique trading opportunities and risk profiles.

Why Trade S&P 500 Equal Weight Index Options?

Broad Exposure
Access enhanced diversification and balanced exposure across all 500 constituents.
Unique Performance Profile
Benefit from historically different volatility and return patterns compared to cap-weighted SPX.
Relative Value Trading
Capitalize on relative value and dispersion-like trading opportunities between SPEQX/SPEQW and SPX.
Tax Efficiency
Enjoy potentially favorable tax treatment (60% long-term/40% short-term capital gains).*
Institutional-Grade Structure
Eliminate early assignment risk and physical delivery requirements through cash-settled, European-style exercise.
Hedging Flexibility
SPEQX and SPEQW options may be utilized to hedge the growing $70B+ equal-weight ETF market. **

**Source: S&P DJI

Overview of the S&P 500 Equal Weight Index

What’s the difference between S&P 500 Equal Weight Index Options and SPX?

Feature SPEQX Options SPX Options
Index Methodology Equal-weighted (0.2% per constituent) Market cap-weighted
Sector Exposure Balanced across sectors Tech/Communications heavy
Volatility Profile Historically provides lower volatility Higher volatility driven by large caps
Contract Size Smaller sized contract 1/10 value of S&P 500 Equal Weight Index Full sized contract

Client Use Case for S&P 500 Equal Weight Index Options

Asset Managers

  • Income-focused strategies (covered call/put writing on equal-weight exposure)
  • Portfolio hedging for equal-weight portfolios
  • Alternative to using ETF options for UCITS-compliant funds
  • Hedge Funds

  • Relative value trades between cap-weighted and equal-weighted indices
  • Expressing views on market breadth vs. concentration
  • Alternative to dispersion trades without single stock option complexity
  •  ETF Issuers

  • Hedging for equal-weight ETF products
  • Creating structured products based on equal-weight exposure
  • Supporting options-based ETF strategies using equal-weight as the underlying
  •  RIAs and Wealth Managers

  • Alternative income strategies with potentially lower volatility
  • Diversification away from cap-weighted concentration risk
  • Tax-efficient options strategies using 1256 contracts
  • Trading Resources

    Available Expirations and Trading Hours

    AM-settled standard monthly SPEQX options expire on the third Friday of each month, with FLEX options also available for customized strike prices and expiration dates. PM-settled SPEQW options may include quarterly, end of month, weekly Friday and daily expirations.

    SPEQX options trade during regular trading hours (RTH) from 9:30 a.m. ET to 4:15 p.m. ET on business days preceding the expiration date. SPEQW options trade during regular trading hours (RTH) from 9:30 a.m. ET to 4:15 p.m. ET on business days other than the expiration date. SPEQW option trade until 4:00 p.m. ET on the expiration date.

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    Market Data

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    Disclaimer
    * Under section 1256 of the 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.

    There are important risks associated with transacting in any of the Cboe Company products discussed here. Before engaging in any transactions in those products, it is important for market participants to carefully review the disclosures and disclaimers contained at: https://www.cboe.com/global-disclaimers/ . These products and digital assets are complex and are suitable only for sophisticated market participants. In certain jurisdictions, Cboe Company products are only permitted for investment professionals, certified sophisticated investors, or high net worth corporations and associations. 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.

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