SPX vs XSP Options: Differences, Taxes and Which to Trade

SPX vs XSP at a glance

Contract size: 1 SPX = 10 XSP

XSP is based on one tenth of the S&P 500 index. With the S&P 500 at 7,800, XSP is at 780. Both contracts use a $100 multiplier, so one SPX contract represents $780,000 of index exposure and one XSP contract represents $78,000.

Option prices scale the same way. Suppose an SPX 7,800 call is trading at $60.00, which costs $6,000 for one contract. The XSP 780 call with the same expiration will trade near $6.00, or $600. Ten of those XSP calls give you about the same position as one SPX call.

Position sizing and spread risk

For spread traders, size shows up as risk per spread. The most you can lose on a vertical credit spread is the distance between the strikes, times $100, minus the credit you collected. Here's the same trade on both, before commissions:

Both spreads cover the same stretch of the index, so one SPX spread is about ten XSP spreads. What changes is the size of each step. On SPX the smallest practical unit of risk is several hundred dollars; on XSP it's under $100. That helps when you:

• Have a smaller account and want each trade to be a small share of it.
• Scale in or out of a position a little at a time.
• Hedge part of an SPX position, for example with three XSP puts, which works like 0.3 of an SPX put.
• Test a new strategy with real money but small size.

One trade-off: XSP strikes are usually 1 point apart, which is 10 points in SPX terms, while SPX strikes are usually 5 points apart. If you need precise strike placement, SPX gives you the finer grid.

To run your own numbers, with probability of profit and a risk graph, try our free SPX & XSP options calculator. New to credit spreads? Start with our SPX credit spreads guide.

Exercise and settlement

Both SPX and XSP options are European-style: they can only be exercised at expiration. A short SPX or XSP option can't be assigned early, which removes a risk that comes with stock and ETF options.

Both are also cash-settled. At expiration, an in-the-money option pays the difference between its strike and the settlement value in cash. No shares change hands, so you never end up holding stock you didn't plan for.

AM vs PM settlement

This is where the two differ:

• Standard monthly SPX options (third Friday, root symbol SPX) are AM-settled. Their last trading day is Thursday, and the settlement value (symbol SET) is calculated from the opening prices of the S&P 500 stocks on Friday morning. If the market gaps overnight, settlement can land far from Thursday's close, and there's no way to trade out of it.
• All other SPX expirations (root symbol SPXW), including the daily options, are PM-settled. They trade until 4:00 p.m. ET on expiration day and settle on the index's closing value.
• XSP options are all PM-settled, so AM settlement never comes into play.

If you trade SPX around the third Friday of the month, check whether your contract is SPX or SPXW. Most platforms show the root symbol in the option chain.

Expirations, 0DTE and trading hours

Since 2022, both SPX and XSP have had expirations every weekday, Monday through Friday. That's what makes same-day (0DTE) trading possible on either one, alongside weekly, monthly and longer-dated contracts.

Both also trade almost around the clock on weekdays. Besides regular hours (9:30 a.m. to 4:15 p.m. ET), Cboe runs a short after-hours "curb" session and an overnight session called Global Trading Hours. Not every broker offers every session, so check yours before you plan on trading outside regular hours.

Taxes: the 60/40 rule

For US taxpayers, SPX and XSP are taxed the same way. Both are broad-based index options, which the tax code treats as Section 1256 contracts:

• 60/40 split: 60% of your gain or loss counts as long-term and 40% as short-term, no matter how long you held the position. That applies even to a trade you opened and closed the same day.
• Marked to market at year-end: positions still open on the last business day of the year are taxed as if you sold them at that day's price.
• Separate reporting: your broker lists them in their own section of your 1099-B, and they go on IRS Form 6781.

At the top federal brackets (37% short-term, 20% long-term), that works out to a maximum blended rate of 26.8% on Section 1256 gains, compared with up to 37% on short-term gains from SPY or stock options. The 3.8% net investment income tax can apply to both. None of this matters inside an IRA or other tax-advantaged account.

Because the treatment is identical, taxes aren't a reason to pick SPX over XSP, though they can be a reason to pick either one over SPY. This is general information, not tax advice, so check with a tax professional about your own situation.

To see the difference on your own numbers, use the 60/40 tax comparison in our calculator. It's a simplified estimate, not tax advice.

Liquidity and trading costs

Low volume and wide bid-ask spreads are the main reasons many traders skip XSP, and for years that reputation was deserved. Apart from a burst in 2019, XSP traded fewer than 50,000 contracts a day, and in 2021 fewer than 20,000, while SPX traded well over a million.

That has changed quickly since 2022, when Cboe gave XSP daily expirations and overnight trading. XSP averaged about 115,000 contracts a day in 2025, and 2026 has brought one record after another, the latest being 274,000 a day in September. Daily volume is now about ten times what it was in 2021, and in recent months roughly 60% of it has been same-day (0DTE) trading.

More volume usually means more market makers competing for orders and tighter quotes, and Cboe runs an incentive program for XSP market makers that meet stricter quoting standards. Still, XSP is much smaller than SPX, which trades roughly 25 times as many contracts, each ten times bigger. That difference shows up in two places:

• Bid-ask spreads. SPX spreads look wider in dollars but are narrower relative to the size of the position. On XSP the spread is often a bigger share of the option's price, and when you need ten XSP contracts to match one SPX contract, you pay that spread ten times.
• Commissions and fees. Brokers charge per contract, so matching one SPX contract with XSP means paying ten commissions. At $0.65 per contract, that's $6.50 instead of $0.65 each way. SPX usually carries higher exchange fees per contract, which narrows the gap but rarely closes it.

So once your position is the size of one SPX contract or more, SPX is usually the cheaper way to trade it. Below that, XSP is what lets you trade it at all. Either way, use limit orders, especially for multi-leg XSP orders.

What about SPY options?

SPY options are options on the SPDR S&P 500 ETF. SPY trades at roughly one tenth of the S&P 500, so a SPY option is close in size to an XSP option, but it works very differently:

SPY's volume and tight spreads are hard to beat. But if you hold spreads to expiration, XSP's cash settlement, lack of early assignment and 60/40 taxes are real advantages, especially in a smaller account where being assigned 100 SPY shares (roughly $78,000 of stock) could be a problem.

SPX or XSP: how to choose

Choose XSP if:

• Your account is small, or your trade is worth less than one SPX contract.
• You want to add to, trim or hedge a position in small steps.
• You're trying out a strategy and want real but small positions.

Choose SPX if:

• You regularly trade the equivalent of ten or more XSP contracts.
• You want the most liquid market and the lowest cost per dollar of exposure.
• You want finer strike spacing (5 points instead of 10).

Either one gives you daily expirations, nearly 24-hour trading on weekdays, no early assignment and 60/40 tax treatment.

Many traders use both: they put the core position on in SPX and fine-tune it with XSP, for example by hedging an SPX credit spread with a few XSP puts. The catch is that most platforms show each position on its own, in its own units, so it's hard to see what the combination actually does. That's why we built the SPX-XSP Risk Graph Visualizer, a Windows app that scales XSP to SPX terms and draws both positions and their combined profit and loss at expiration on one chart.

Frequently asked questions