The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about SPX options settlement. When you’re trading options and you start gravitating towards larger products like SPX compared to SPY, the option settlement can be just a little bit different. I want to talk specifically about how SPX options are settled because I know that there’s a lot of confusion out there about it and it could probably help you and in many cases, it could help you avoid something that you wouldn’t have expected otherwise relating to the last trading day versus the actual settlement value. The first thing you have to understand about SPX options is that they’re cash-settled. These are European-style. You can’t exercise them early because there’s nothing really to exercise. You don’t get underlying shares of SPX because SPX does not trade underlying shares. It’s all cash-settled. This actually makes it a little bit easy because a lot of people like trading SPX. You do