Stock Market Index Options

Where can a trader find options on the stock market indexes or indices? For a stock the options are connected to that stock and can usually be found very easily. For an index it is only confusing because a traders has many options (no pun intended).

The S&P 500, the FTSE, MICEX, Dax or the Tadawul  are a indexes that traders cannot trade directly. The way the index is trades is via a futures contract or an ETF.

The ETF for the S&P 500 Index is ticker: SPY. The SPY ETF trades in perfect correlation to the actual S&P 500. So when a trader would like to “buy a call on the S&P” or “buy a put on the S&P”, the way it is done is by buying a put or call option on the SPY.  As traders can see in the picture below, there are more options listed for the SPY than any other stock or etf.

Index Options Chain

The other option or method to buy options on the index is via the futures contracts. The S&P 500 futures contract trades on the CME (Chicago Mercantile Exchange) under the ticker ES. They are also referred to as the EMini’s. There are options listed on the S&P futures and they are similar to those traded on the SPY ETF.

A trader needs to look out for the option multiples and option expiration dates and types when using Futures Options.

Another way to trade options on the Indexes is with Binary Options. There are binary option brokers that offer short term options on many of the large stock market indexes. Although binaries are different than weekly options or monthly options they are very easy to understand.