An Index Option is an option contract that gives you the right to buy or sell the value of an underlying index at a strike or exercise price.
As opposed to equity options, Index Options are cash settlement only. You will receive cash based on the difference between the exercised settlement value and the strike price rather than the delivery of underlying equity. No stock is being transferred, bought, or sold.
What Types of Index Options are Currently Supported at TradeUP?
SPX - S&P 500 Index Options
SPXW - S&P 500 Index Weekly Options
DJX - Dow Jones Index Options
NDX - NASDAQ 100 Index Options
NDXP - NASDAQ 100 Index Weekly Options
VIX - CBOE Volatility Index Options
VIXW - CBOE Volatility Index Weekly Options
XSP - Mini Standard & Poor's 500 Index Options
NANOS - NANOS Standard & Poor's 500 Index Options
Click here to see each Index Option's settlement and Expiration Date.
What are the fees associated with trading Index Options?
TradeUP currently does not charge any commission or fees for Index Options.
Order Types for trading Index Options
Currently, only Limit orders are supported to trade Index Options.
TradeUP Index Option Hour Trading Hours:
Regular trading hours (9:30AM to 4:00PM EST)
Exceptions: Index options NDX and NDXP trades from 9:30AM to 4:15PM EST.
Examples of Trading Index Options:
Cash-Settled Call: An account purchases 50 "ABC" cash-settled call index option and the reported exercise settlement value is $55.
The cash settlement value of the call option is $500. [(55-50) x 100 = $500].
Cash-Settled Put: An account purchases 50 "XYZ" cash-settled put index option and the reported exercise settlement value of the put is $40.
The cash settlement value of the put option is $1,000 [(50-40) x 100 = $1,000].
Index Option Settlement:
At TradeUP, Index Options are all European Style Options. European Style Options are options that can only be exercised on the designated expiration date.
AM Settlement - Index Options with AM Settlement establish their exercise settlement value 30 minutes after market opens on day of expiration.
AM Settled Index Options stop trading the day before the expiration date.
PM Settlement - Index Options with PM Settlement establish their exercise settlement value at market close on day of expiration.
PM Settled Index Options allow for trading of day of expiration up until market close.
If the expiration date is a non-trading day, it will be advanced to the previous trading day.
Please note the following exception: if the non-trading day is Monday, then it will be postponed to the next Trading Day.
Still got questions? Contact TradeUP Customer Support by email at support@tradeup.com or reach out to us on Live Chat!