Stock Index

I understand that the option is. But what is the difference between options on stock index and options on futures contracts on stock index?

The difference is that an option on a stock index was the index's cash underlying instrument. So, for the S & P 500 (SPX) options traded on the CBOE, the underlying is the real S & P 500, who gets quoted a lot on television and in newspapers. These options are settled in cash.

On the other hand, an option on a future stock index has the real index futures contract underlying. Thus, for options on the S & P 500 index futures (eg E-mini, ES ticker) that are listed on the CME, the underlying futures contract is the E-mini. These options are either settled in cash (quarterly options) or in the futures contract nearst (standard features). For example, options have September September futures contract as the underlying cash and settle the options expire at the same time as the futures contract underyling. August options, have the same September futures contract as the underlying, but since August options expire on 1 month ago they moved into the futures contract in September.

This does not seem a big deal, until you have a calendar spread, where the two options may have different underlying contracts, and so you have more basis risk. This risk does not exist in the cash index options, as all maturities have the same underlying.

There are also differences in how the index options and futures options are cash margin. cash index options fall under the regulation. T, while the options are ultimately SPAN margin.

Another difference, this rule applies if you pay tax in the United States, is that the futures options as a full-term favorable tax treatment (40/60).

the difference is its underlying assets. The first value is based on the price index of stocks and value the second is based on the future of the stock index.

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