european style shower enclosure s 40 advantages of the credit spread - spx vs the spy ...

by:C&Y Union     2020-03-09
Debate between SPX and the trade credit spread (especially the drop credit spread) on SPXSpies never end.However, for those who are not familiar with options or credit spread transactions, the discussion is always worth it.To be clear, when dealing with credit spreads, the premium received with S & p x usually occurs at the Mark (or midpoint, or no more than 5 cents at most (equivalent to 1/2 of the spy ).
A common misconception is that many people think that you have to buy and sell by market value (SPX has a bigger price difference than a spy );But this is not the case.So what is the advantage of SPX (versus spy?First, SPX is 10 times bigger than a spy (1,747)174.9, at the end of 11/7/13 ).This means that the contract is reduced due to high prices (usually 9-10 spy contracts per 1 SPX contract), which results in a reduced commission for the same premium.
Second, the weekly SPX and monthly SPXPM are due on Friday and settled in the afternoon like a spy.This is only monthly SPX due on Thursday and settled on Friday morning.If you trade once a month (spy or SPX) then you usually exit your position after getting a premium of 50% or less.
Some say the shortcomings of trading monthly SPX in terms of settlement, but this is no longer a problem with SPXPM.Third, SPX cash settlement, while spies settle shares.Cash settlement is important if you have a small account and you don't want your capital to be tied to spy shares.
Fourth, SPX is European and spy is American.European style options cannot be assigned before expiration;American style options can be assigned before expiration.SPX is a better option if you care about tasks (when your position is ITM.
Fifth, in 1-SPX has a tax advantage (1256 exchange rate), of which 60% of profits are taxed at the long-term capital gains rate and 40% are taxed at the short-term capital gains rate;Spies are taxed 100% on short-term capital gains.This is significant and helps improveend earnings.Please note that profit from transactions based on more than 1-1This year, the tax is still based on the long-term capital gains rate of SPX and spies.
Sixth, there is no risk of dividends for SPX and spies.What is the dividend risk?When the dividend is allocated to the underlying stock holder, the option price (or premium) is adjusted accordingly.In conclusion, the above five advantages (2nd only addresses the differences that no longer exist) suggest that SPX (when dealing with credit spreads) provides a significant advantage that deserves further consideration.
To learn more about options and how to get a consistent, low-risk earnings trading week option, visit: options attachment
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