SYNAPSEWhy SPX, and XSP when SPX is too big.
Synapse reads direction from /ES futures and calls its trades in S&P 500 index options, not SPY. Index options settle in cash, can't be assigned early, and get a different tax treatment. XSP carries all of that at a tenth of the size.
Four differences that matter on a same-day trade.
Cash at the close
At expiration the account is credited or debited in cash. No shares land in the account, and no stock position carries into the next morning from a strike that finished in the money.
No early assignment
SPX and XSP can only be exercised at expiration. A short leg can't be assigned halfway through the day, which matters for a butterfly like Phoenix's that sells its middle strikes and holds them into the close.
Taxed 60/40
Under Section 1256 of the tax code, gains and losses on these options may be treated as 60% long-term and 40% short-term, however long you held them. A trade held for an hour still gets the long-term share.
Settled on the close
SPXW and XSP list an expiration every weekday and settle on the S&P 500's official closing value. The standard monthly SPX stops trading the day before and settles on opening prices instead, so Synapse uses the weeklies.
What 60/40 is worth at the top bracket.
Take a $10,000 gain on a same-day trade, with federal tax at the top 2026 rates: 37% for short-term gains and 20% for long-term.
All short-term, taxed as ordinary income at 37%.
$3,700
60% at 20% plus 40% at 37%, a blended 26.8%.
$2,680
That is $1,020 less on every $10,000 of gain. Lower brackets narrow the gap without closing it, and the 3.8% net investment income tax applies either way. Section 1256 contracts are also marked to market at year end and reported on IRS Form 6781. Per Cboe, the treatment applies when the investor and the strategy meet the tax code's criteria. This is general information, not tax advice: ask a tax professional about your own situation.
SPX, XSP and SPY options compared.
| Feature | SPX | XSP | SPY options |
|---|---|---|---|
| Size of one contract | 100 × the index ($750,000 at 7,500) | 10 × the index ($75,000) | About the same as XSP ($75,000) |
| Settles in | Cash | Cash | Shares of the ETF |
| Exercise | European: only at expiration | European: only at expiration | American: any time, so early assignment is possible |
| Same-day expirations | Every weekday (SPXW) | Every weekday | Every weekday |
| Settlement price | The S&P 500's official close (SPXW) | One tenth of the S&P 500's official close | Shares delivered at the strike |
| US tax treatment | May qualify for 60/40 (Section 1256) | May qualify for 60/40 (Section 1256) | Standard: short-term if held under a year |
Sources: Cboe SPX and XSP fact sheets (2026); IRS Topic 409 and the 2026 tax-year adjustments. Sizes use an illustrative S&P 500 level of 7,500.
XSP: the same index at a tenth of the size.
One SPX contract controls about $750,000 of S&P exposure. Even a defined-risk trade on SPX can tie up a large share of a small account. XSP is the same index, cash-settled and European, at one tenth the size, so one contract carries a tenth of the exposure.
Coming from SPY options?
XSP is the like-for-like swap: about the same size per contract, cash instead of shares, no early assignment, and 60/40 instead of all short-term.
What does it cost?
Liquidity. In our own quote captures, XSP's spreads run wider relative to its size than SPX's, so a fill costs more per dollar of exposure. Use limit orders and expect to give up a little more getting in and out.
What does Synapse do?
Its own books trade XSP while the account is small and SPX once it can carry the size. The calls are the same either way: the side, the strike relative to the money, and the exit rule.
Why read /ES at all?
/ES futures trade nearly around the clock, so the engine reads direction there. The trade itself is called in SPX options. See how a call gets made.
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