SPX trades on Robinhood, but only as options, not as shares

You cannot buy or sell SPX shares on Robinhood. SPX is the S&P 500 Index — a basket of 500 large-cap stocks tracked as a single number. It exists only as an index, not as a tradeable stock. However, Robinhood does let you trade SPX options (calls and puts) if your account has options approval at Level 2 or higher.

The key difference: when you trade SPX options, you are betting on whether the index will move up or down by a certain date. You are not owning any part of the index itself. SPX options settle in cash, not in shares, which means Robinhood closes your position automatically on expiration day and deposits or withdraws money from your account.

SPX options are popular with experienced traders because they have tax advantages over regular stock options and lower per-contract costs. But they also carry real risk — options can expire worthless, and you can lose your entire investment in a single trade.

Key Takeaways

  • SPX options are available on Robinhood only if your account has Level 2 or higher options approval; you must request this upgrade in the app.
  • SPX options settle in cash on expiration day, so Robinhood automatically closes your position and you never own shares of the index.
  • SPX options cost less per contract than standard S&P 500 options (SPY or IVV) because the index value is higher, making the multiplier smaller.
  • SPX options have a 60-day holding period for tax purposes under Section 1256 rules, which can lower your tax bill compared to regular stock options.
  • You can trade SPX calls (betting the index goes up) or puts (betting it goes down) with expiration dates ranging from days to months away.

How to request options approval on Robinhood

To trade any options on Robinhood, including SPX, you must first have options approval. Open the Robinhood app, tap the Account icon (bottom right), then scroll to "Investing" and select "Options." Robinhood will show your current approval level and a button to request a higher level if you do not yet have one.

Robinhood approves options requests when ready in most cases. Level 1 approval lets you buy calls and puts only. Level 2 approval lets you sell covered calls and cash-secured puts. SPX options are available at Level 2 and above. If Robinhood denies your request, the app will tell you why — usually because your account is too new or your net worth is below their threshold.

There is no fee to request or receive options approval. Robinhood does not charge commissions on options trades, though you will pay the bid-ask spread (the difference between the price someone will buy at and the price someone will sell at).

SPX options versus SPY options on Robinhood

Both SPX and SPY track the S&P 500, but they trade differently. SPY is an exchange-traded fund (ETF) — a real security you can own shares of. SPX is an index only, so you can only trade options on it. On Robinhood, SPY options are more liquid (easier to buy and sell quickly) because more traders use them, but SPX options have lower per-contract costs.

Here is the practical difference: one SPX option contract controls $100 times the index value. One SPY option contract controls 100 shares of SPY. If the S&P 500 is at 5,000, one SPX call costs roughly one-fifth the price of one SPY call, even though they track the same index. For traders with smaller accounts, SPX options are cheaper to enter.

SPX options also have a tax advantage. Under IRS Section 1256 rules, SPX options are taxed as 60% long-term capital gains and 40% short-term capital gains, no matter how long you hold them. SPY options are taxed as ordinary income if you hold them less than a year. This can save money at tax time, though the benefit only matters if you are profitable.

How SPX options expire and settle on Robinhood

SPX options expire on the third Friday of each month, plus weekly expirations on other Fridays. When your SPX option expires, Robinhood does not let you own shares — instead, the position settles in cash. If you own a call and the index closes above your strike price, Robinhood deposits the profit into your account. If the index closes below your strike price, your option expires worthless and you lose your investment.

You do not have to hold an SPX option until expiration. Most traders close their position (sell it back) days or weeks before expiration to lock in a profit or cut a loss. On Robinhood, you can sell an SPX option you own at any time during market hours by tapping the position and selecting "Sell."

Robinhood will warn you if you own an SPX option that is about to expire. The warning usually comes one business day before expiration. If you do nothing, Robinhood will automatically close the position at market close on expiration day and settle it in cash.

Risks and costs of trading SPX options on Robinhood

SPX options can move fast. The index itself moves in small increments, but options prices can swing 10%, 20%, or more in a single day based on how close the option is to expiration and how much the index moves. A $100 investment can become $10 or $200 in hours. This speed attracts some traders but ruins others who do not understand the math.

Your maximum loss on a call or put you buy is the money you paid for it. If you pay $50 for a call and the index moves the wrong way, you lose $50. If you sell options (a more advanced strategy), your loss can be much larger. Robinhood requires Level 2 approval or higher before you can sell options, and the app will warn you about the risks before you place your first sell order.

The bid-ask spread is your real cost. Robinhood does not charge commissions, but the difference between what buyers will pay and what sellers will accept can be 5% to 20% of the option price on SPX, especially on options expiring soon or far from the current index value. This spread is money you lose the moment you buy, and you must make it back before you can profit.

How to place an SPX options trade on Robinhood

Open Robinhood and search for "SPX" in the search bar. Tap the SPX result. You will see the current index value and a list of available options by expiration date. Tap the expiration date you want (for example, "3 weeks out" or "this Friday"). Robinhood will show you all the strike prices — the price levels at which you can bet the index will go above (calls) or below (puts).

Tap the call or put you want to buy. Robinhood will show you the current bid price (what you will pay to buy it) and the ask price (what you will receive if you sell it). Tap "Buy" and enter the number of contracts. Robinhood will show your total cost and ask you to confirm. Tap "Place Order" and your trade executes when ready during market hours.

You can also set a limit order — telling Robinhood to buy only if the price drops to a certain level, or sell only if the price rises to a certain level. Tap "Limit Order" instead of "Buy" to set this up. Limit orders can save money on the bid-ask spread, but they may not fill if the price never reaches your target.

Frequently Asked Questions

Do I need a minimum account balance to trade SPX options on Robinhood?

Robinhood does not publish a minimum balance for SPX options, but your account must have enough cash to cover the cost of the option you want to buy. If you want to sell options (a more advanced strategy), Robinhood requires a higher net worth and will tell you during the approval process if you do not meet it.

Can I hold SPX options overnight or over the weekend?

Yes. SPX options can be held for days, weeks, or months until expiration. The price will change when the market is open (9:30 a.m. to 4 p.m. Eastern on weekdays). Over the weekend or when markets are closed, the price does not change, but it will jump when the market opens Monday morning based on news and overnight events.

What happens if I own an SPX call and the index gaps up on expiration day?

Your option will be worth more money. Robinhood will automatically settle it in cash at market close, depositing your profit into your account. You never own shares of the index — the settlement is always cash.

Are SPX options better for taxes than SPY options?

SPX options can be better if you are profitable, because they may have access to for Section 1256 treatment: 60% long-term capital gains rates and 40% short-term rates, regardless of how long you hold them. SPY options are taxed as ordinary income if held less than a year. However, this advantage only helps if you have gains to report. Losses on both are deductible the same way.

Can I trade SPX options before 9:30 a.m. or after 4 p.m. on Robinhood?

No. SPX options trade only during regular market hours: 9:30 a.m. to 4 p.m. Eastern, Monday through Friday. Robinhood does not offer extended-hours trading for options. You can place orders outside market hours, but they will not execute until the market opens.