The S&P 500 is the premier stock market index tracked by professionals. It was created in 1926 and includes the 500 largest companies listed on U.S. exchanges. Since inception, it has risen approximately 10% annually (with lots of volatility and down years along the way).

Today I wanted to provide clarity on the many ticker symbols based on the S&P 500.

Cash Index

The S&P 500 is a Cash Index that trades under the ticker SPX. It’s currently hovering at a cool 3,000. Here’s a list of the key facts with tracking and trading this ticker:

• The level of SPX is what’s quoted in the media.
• SPX is not a stock. It cannot be bought and sold.
• SPX has no volume, so you won’t be able to analyze volume patterns.
• SPX is quoted during regular trading hours (9:30 AM to 4 PM EST).
• SPX does have listed options contracts available to trade.

Once an index is created, the clever elves at exchanges and institutions can go to work creating trading products based off of them. And that brings us to the other two popular methods for tracking the S&P 500.

Futures

Futures contracts are available on the S&P 500 and offer a few advantages that you don’t get with SPX. The e-mini contract that virtually all retail traders play with is /ES. Here are the key points.

• /ES trades 24 hours a day. It closes on Friday and opens back up on Sunday night.
• /ES trades at virtually the same level as SPX. They both sit close to $3,000.
• /ES can be bought and sold and thus has volume to analyze
• /ES does not show overnight gaps like SPY or SPX (unless a gap happens between Friday and Sunday night) because it’s trading overnight.
• The lack of gaps makes /ES a cleaner chart to analyze.
• /ES does have listed options
• Because of the ample leverage inherent in futures contracts, the only retail traders that buy and sell /ES are day traders.

Exchanged Traded Funds (ETFs)

Countless ETFs have been created that track the S&P 500. Virtually every major fund provider from Vanguard and Fidelity to Blackrock and Schwabb offers one. But the most popular is the “SPYders,” which trades under the ticker SPY. Here’s a list of the key facts with tracking and trading this ticker:

• SPY trades at 1/10th the price of SPX. Since SPX is at $3,000, SPY is at $300.
• SPY can be bought and sold like a stock.
• SPY has volume and thus allows for volume analysis.
• SPY recently became available to trade 24 hours a day.
• SPY has listed options contracts available to trade.
• SPY pays a quarterly dividend of $1.38 and has a yield of 1.85%.

Let’s talk about the dividend for a second because it causes the chart of SPY to look different than SPX on the ex-dividend date. On that day, SPY should open down about $1.38 (or whatever amount the quarterly dividend is) even if SPX opens unchanged. That will cause the candlestick to appear more bearish on SPY than SPX or /ES. But it’s a mirage and should be ignored.

Friday was the ex-dividend date for SPY and is why it had a much more bearish looking candle than its counterparts.

Key Takeaways

When trading options strategies like verticals (bull puts, bear calls, iron condors) I prefer SPX over SPY because it’s more expensive and I can typically build the same trade for less contracts which saves commissions. For strategies like poor boy’s covered calls, diagonals, regular covered calls and the like, I’ll use SPY.

Which ticker you track depends, in part, on what you trade. When the market is open, I focus on SPY. When it’s closed, I still use SPY but will glance at /ES to see if anything has changed since the close. I only use SPX if I’m building options trades on it.

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses, and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involve a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax, and accounting advisors, to determine whether such trading or investment is appropriate for that user.