This is a stupid question from a newbie in the options world, but here it goes.... What is the multiplier for SPX options? I have seen both 100 and 250 given as answers and I am a little confused on which one is correct. Also, assuming a simple buy call/put trade, if you exercise the option, do you have to put up the entire amount of the cash index or do you just have to pay the futures contract margin on it. I hope this makes sense, I am just trying to get a better handle on things, and I thought this was a good place to look. Thanks
Depends on which options you're talking about. SPX index options, which trade on CBOE have a multiplier of 100. Options on the big S&P 500 futures have a multiplier of 250 because one options contract is for 1 futures contract which has a multiplier of 250. E-mini S&P 500 futures options have a multiplier of 50. The latter two trade on CME.
Again depends on which options you're talking about. SPX index options are cash-settled and when you exercise you just get the amount the option is ITM in cash. Options on S&P futures (big contract and e-mini) can be either, depending on expiration month. Quarterlies expire into cash, so it is the same procedure as above. Serials expire into closest futures contract, which then requires a standard margin for a futures contract (aka performance bond).
I don't trade ES options, but if they are cash settled (quarterlies), is it safe to say that 2 ES options at 1 strike = 1 SPX option at the same strike? I know the SPX settled with the SOQ, but is it the same for the mini/big options?
Not exactly, as they have slightly different underlyings, but, yes, 1 SPX option is equivalent to 2 ES options.
I understand one has the cash market as the underlying, the other the futures market. My question is this. Say you are long 2 ES 1400 calls. Are you then long 2 contracts of ES at 1400, which gets settled against the cash market, making it essentially the same as SPX settlement?
So, to use your example, if you're long 2 ES 1400 FEB Calls then at expiration (assuming that they're in the money) you will end up LONG 2 ES. If you're long 2 ES 1400 MARCH (ITM) Calls then at expiration you will be settled with cash.