Index Options FAQ
An index option is a contract that gives the holder the right, but not the obligation, to buy or sell the value of an underlying index at a specified price by a certain date. Index options are typically cash settled because the underlying asset, an index, is not something that can be directly bought or sold like a stock.
Our Education Hub offers a variety of learning tools, including courses, videos, and webinars on different option strategies and additional learning materials on Index Options and Greeks.
You can trade index options on any BMO InvestorLine Self-Directed account approved for options trading. For new accounts, you can apply for an options-approved account during account opening. To upgrade your existing account to enable options trading, complete this form for registered accounts and this form for non-registered accounts.
You can trade long calls and puts, vertical debit and credit spreads as well as long straddles and strangles.
Note: Calendar and diagonal spreads as well as uncovered index options strategies are currently not permitted.
You can trade long call and put options on a large variety of indices including the NASDAQ, S&P 500, and Dow Jones. You can also trade multi-leg index options on the following set of indices:
| Index | Symbol | Description |
|---|---|---|
| Dow Jones | DJX | 1/100th of the DJI |
| NASDAQ | NDX | Nasdaq Index |
| NDXP | Nasdaq Index | |
| XND | 1/100th of the Nasdaq | |
| NQX | NASDAQ-100 Reduced Value Index | |
| S&P 500 | SPX | S&P 500 Index |
| SPXW | S&P 500 Index | |
| XSP | S&P Mini: 1/100th of the S&P 500 | |
| OEX | S&P 100 | |
| Russell | RUT | Russell 2000 index |
| RUTW | Russell 2000 index | |
| MRUT | 1/100th of the Russell 2000 | |
| Volatility Index (VIX) | VIX | Volatility index |
| VIXW | Volatility index | |
| VXM | 1/100th of the VIX |
Note: For detailed information on the above indices, refer to the following links:
- Dow Jones: DJX
- NASDAQ: NDX | NDXP | XND | NQX
- S&P 500: SPX, SPXW and XSP | OEX
- Russell: RUT, RUTW and MRUT
- Volatility Index (VIX): VIX, VIXW and VXM
AM-settled index options typically stop trading on the business day before expiry. The value of the AM-settled option is determined by the opening price on the expiration date. For example, if the last trade occurs on Thursday night, the settlement value won’t be determined until the next business day’s market open, leaving the possibility for some overnight risk.
PM-settled index options typically stop trading at 4:00pm ET on the day of expiry, as there are generally no bids or asks from market makers after 4:00pm ET. However, if such a situation arises, and you would like to trade PM-settled index options after 4:00pm on the expiry date, please contact us for further assistance on a best efforts basis.
The commission structure for index options is the same as stock and ETF options. You can find the details in the Commission & Fee Schedule.
Yes, index option trades count toward the requirements for Active Trader Pricing. Note that a multi-leg option trade counts as one trade. You can review the number of qualified trades by signing into your Self-Directed account on the website, click on your name in the top right, then Client ID profile and finally the Trade Activity tab.