SPX and SPY both track the S&P 500 Index, but they are two different options: the underlying of SPX is the index itself, while the underlying of SPY is shares of an ETF that tracks the S&P 500. An index is just a computed number — there are no shares to deliver; ETF shares can be bought, sold, and delivered. That one difference decides settlement, exercise, and contract size.
Four verified mechanics that differ
Different underlying: the underlying of SPX is the S&P 500 Index — an index of about 500 large US companies. It is not a security, and there are no shares to deliver. The underlying of SPY is shares of the SPDR S&P 500 ETF, which holds about 500 component stocks and trades like a share.
Settlement: SPX is cash-settled: at expiry, an in-the-money contract pays or receives (settlement value − strike) × $100 in cash, and no shares change hands. SPY is physically settled: on exercise, each contract delivers or takes away 100 shares of the ETF.
Exercise: SPX is European-style: it can only be exercised at expiration, so a seller faces no early-assignment risk. SPY is American-style: the buyer can exercise at any time before expiration, and a deeply in-the-money short leg can be assigned early — especially around the ETF’s ex-dividend dates — leaving a 100-share-per-contract stock position in the account.
Contract size: SPX is $100 per point. With the index at 7,400 and SPY at about $740, one SPX contract has a notional value of about $740,000, while one SPY contract controls 100 shares, about $74,000 — roughly 10x apart. A $1 move in SPY is also worth $100 per contract, but the capital needed for a single contract is far lower.
0DTE and taxes: two more notes
0DTE: both products have contracts expiring every trading day. SPX 0DTE is SPXW: daily expirations, PM-settled. SPY’s daily contracts also trade through the close, but exercise can leave a share delivery overnight.
Taxes (US tax rules only): SPX options qualify under US tax code Section 1256: 60% long-term and 40% short-term capital gains, and wash-sale rules do not apply. SPY options are taxed like ordinary stock options: held under a year they are short-term, and wash-sale rules apply. Taxes depend on the individual; this page only states the rules and gives no tax advice.
Simulate first, then talk about anything else
This simulator uses CBOE delayed quotes (about 15 minutes delayed), starts with $10,000 virtual cash, charges $0.65 per contract per side, and shows P&L net of fees. Its purpose is to practice order entry, discipline, and review. It is not investment advice and promises no returns.