Market Measures

Monday – Friday | 9:00 – 9:20a CT

SPX or SPY Iron Condors?

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Most traders are familiar with the S&P 500 Index as the barometer of the stock market health. But do you know there’s more than one way to trade it? In this piece the Research Team explores the differences in trading SPY and SPX.

The Study:
  • SPY & SPX
  • 45 Days to Expiration
  • 2005 – Present
  • Compared:
    • 10 Contracts of SPY
    • 1 Contract of SPX
  • 20 Delta Iron Condors with Varying Widths:
    • 1, 5, 10 Wide for SPY
    • 10, 50, 100 Wide for SPX
Results:

When comparing performance, we see that there is not much difference in trading SPY over SPX which makes perfect sense considering both products track the same underlying. Differences do emerge in terms of liquidity. We see that the current bid – ask spreads of SPX are nearly 25x wider than the spreads in SPY. When deciding to scale up your trading from SPY to SPX it’s important to consider these liquidity differences, and the differences in commission costs for the number of contracts you’re trading.

Market Measures More installments

See All »

Latest tastytrade Videos As of March 22

Most Shared From the last 30 days