S&P 500: Cboe expands SPX and XPS options suite to offer expirations every day

Rick Steves

SPX and XPS options offer potentially favorable tax treatment, European-style exercise (no early exercise) and cash settlement (no delivery or assignment of shares) at expiration.

Cboe has announced further expansion of its S&P 500 Index (SPX) options suite with additional expirations for SPX WeeklysSM Tuesday and Thursday options.

The product expansion addresses strong customer demand for short-dated, cash-settled, European-exercised S&P 500 Index (SPX) options, namely the more than 44 million contracts of SPX Tuesday and Thursday options executed since their launch in second-quarter 2022.

The additional expirations for SPX Tuesday and Thursday options will align with the number of expirations currently available for SPX Monday and Wednesday options, and meet growing customer demand for Cboe’s SPX offerings, the firm explained.

“Cboe’s proprietary Weeklys contracts are one of our fastest growing products”

Arianne Adams, Senior Vice President and Head of Derivatives and Global Client Services at Cboe Global Markets, said: “Cboe’s proprietary Weeklys contracts are one of our fastest growing products and with these new listings, we are continuing to build out our world-class S&P 500 options franchise to bring even more product choice and versatility to suit our global customers’ diverse trading needs. As ultra-short-dated SPX options trading activity hit record levels, these new expirations meet strong retail and institutional client demand for cash-settled options to spread risk across more trading days and manage intraday volatility in the markets with even greater agility and efficiency.”

Cboe will also launch new Tuesday and Thursday-expiring Mini-S&P 500 Index (XSP) options so that both SPX and XSP options will offer expirations every day, going out at least four weeks, enabling traders to express their views with even greater precision.

XSP options are 1/10th the size of a standard SPX options contract and provide a more manageably sized contract and greater flexibility for new index options traders or traders looking to manage their notional exposure with greater precision.

Both SPX and XSP options offer the potential opportunity to manage large-cap U.S. equity exposure including, but not limited to, the execution of overall risk management and income generation strategies. They also offer potentially favorable tax treatment, European-style exercise (no early exercise) and cash settlement (no delivery or assignment of shares) at expiration.

SPX options are already one of the most actively traded and liquid index options contracts in the world, with trading volumes setting a new monthly record of 51.4 million contracts in August, up 82 percent from August 2021.

XSP options are gaining steady adoption, with 657,000 XSP options contracts traded in August, up 115 percent from a year ago.

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