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Mini index options

A one-tenth-size version of a big index option contract, keeping cash settlement and European exercise at a retail-friendly notional.

Mini index contracts exist to bridge the gap between a $500,000-notional spx-options contract and a much smaller ETF option. The multiplier is the same $100, but the index level is one tenth, so notional is roughly $50,000 per contract.

They keep the features that matter — cash-settled-option settlement, european-style-option exercise, index tax treatment — while letting an account of $25,000 build a proper iron-condor or collar without rounding to zero or one contract.

Example: an index at 5,000 has a mini at 500. A 10-point-wide mini vertical-spread risks $1,000 per contract instead of the $10,000 the full-size version would risk. A trader with a $500 maximum loss can trade half a spread's worth of structure rather than skipping the trade.

Related: spx-options, index-option, etf-option, cash-settled-option

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

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