SPX AM vs PM Settlement Options: Which Contracts Expire When

Reviewed by the SPXtoSPY Editorial Team

The Two-Class System: SPX and SPXW

CBOE lists two classes of index options on the S&P 500. They trade identically during the day — same underlying index, same cash settlement, same 60/40 tax treatment — but they expire differently.

SPX (standard monthly): Expires on the third Friday of each month. Settlement is AM-based, using the Special Opening Quotation. These are the original, grandfathered contracts.

SPXW (weeklies): Expires Monday, Wednesday, and Friday of every week. Settlement is PM-based at the 4:00 PM ET closing print of the S&P 500 index. All non-monthly-Friday expirations use this class, including the fourth-Friday Friday weeklies.

When you look at an options chain, the root symbol tells you which class you're in. The same expiration date can appear under both roots in certain weeks — but the settlement mechanism is fundamentally different.

AM Settlement: How the SOQ Works

AM settlement is the older, more treacherous mechanism. On third-Friday expiration morning, CBOE does not use the 9:30 ET SPX opening tick as settlement. Instead, it calculates a Special Opening Quotation (SOQ) from the individual opening prints of all 503 S&P 500 components.

Here is the exact process:

• Each component stock's first traded price after 9:30 ET is used — not the official open or the midpoint
• If a component does not trade in the opening minutes, CBOE uses the previous close for that stock (with adjustments for any halt or suspension)
• The SOQ is then computed as the index value using those opening prices across all components
• The SOQ is published by CBOE under the ticker SET roughly 30–60 minutes after the open

The critical implication: you will not know your exact settlement price at 9:30 ET. Even if SPX opens at 5,500 on the index display, the SOQ might print at 5,480 or 5,520 depending on how individual stocks open. Divergences of 15–30 points are common; in volatile markets, gaps exceeding 50 points have occurred.

PM Settlement: The Cleaner Mechanism

SPXW weeklies settle at 4:00 PM ET using the official closing value of the S&P 500. What you see on your screen at the close is what you get.

This eliminates the SOQ uncertainty. If you hold an SPXW call expiring Monday and SPX closes at 5,510, your settlement is 5,510. Period. There is no opening-print ambiguity, no SET ticker to watch, no gap between what the index displayed at 9:30 and what you actually settled at.

PM settlement creates a different risk: late-day pin risk. Market makers actively defend high-gamma strikes near 4:00 PM because their hedges reset at the close rather than the open. This produces the characteristic "pinning" behavior you see in weeklies — price tends to gravitate toward major strikes as expiration approaches.

Quick Reference Table

The "Last Day to Trade" Trap in AM-Settled SPX

AM-settled SPX monthly options stop trading at the close of the Thursday before expiration Friday. The Friday itself is settlement day — the options don't trade, they just settle at the SOQ.

This catches traders off guard. If you hold an SPX monthly put and want to close or roll it, you must do so by Thursday 4:00 PM ET. Leaving an in-the-money position to AM settlement means you receive cash, but you cannot adjust size based on the opening gap — you are locked in.

SPXW weeklies, by contrast, trade until 4:00 PM ET on expiration day. You can close a position 30 seconds before the bell if you choose.

How the Third Friday Works When Both SPX and SPXW Exist

On the third Friday of each month, both the monthly SPX and a SPXW weekly share the same calendar date. They are different instruments:

• The SPX monthly stops trading Thursday, AM-settles Friday at the SOQ
• The SPXW Friday for the same date trades through 4:00 PM Friday, PM-settles at the close

These two contracts will have different settlement prices on the same Friday. The SPX monthly will print the SOQ (published around 10–10:30 AM). The SPXW Friday will settle at whatever SPX closes at 4:00 PM. On a volatile expiration, those two numbers can be 20–40 points apart.

When scanning a chain for third-Friday options, always verify the root. Many platforms display both in the same expiration row — look for the SPXW suffix or confirm with your broker which settlement applies.

Practical Implications for 0DTE Traders

The vast majority of 0DTE SPX trading happens in SPXW weeklies. Here's why: you can trade them all day until 4:00 PM, and your settlement reference (the closing print) is visible and unambiguous.

The AM-settled SPX monthly creates two practical issues for 0DTE approaches:

1. You can't hold through the settlement event. To participate in expiration-Friday price action, you'd need to use the SPXW Friday — not the monthly SPX — since the monthly stopped trading Thursday.
2. SOQ gap risk is unmanageable in size. If you carry monthly SPX exposure into Thursday close expecting a certain level, a large gap open Friday morning can produce a wildly different SOQ. There's no exit once the Friday morning session begins for monthly SPX.

For pure 0DTE strategies, stick to SPXW. Reserve the monthly SPX for multi-week positions where the AM settlement timing is a known, planned feature of the trade.

Tax Treatment: Both Are Section 1256 Contracts

Both SPX and SPXW options qualify as Section 1256 contracts under IRS rules. This means all gains and losses — regardless of holding period — are taxed at a blended rate: 60% long-term capital gains rate, 40% short-term. The 60/40 treatment applies whether you hold the position for one minute or eleven months.

This is a meaningful advantage over SPY options. SPY options are not Section 1256 contracts; short-term SPY option gains are taxed at ordinary income rates. For active traders with high turnover, the SPX/SPXW tax treatment can represent a substantial annual savings.

Both SPX and SPXW also benefit from mark-to-market treatment: open positions are treated as if sold at year-end fair market value, which allows you to capture losses for tax purposes without a wash-sale concern.

Checking Settlement on Expiration Day

For AM-settled monthly SPX:

1. Watch the CBOE SET index — it publishes the SOQ when calculated, typically 30–60 minutes after the open
2. Do not rely on the SPX level at 9:30 as a proxy — it can differ materially
3. Your broker's P&L will update once the SOQ is confirmed

For PM-settled SPXW:

1. The settlement price is the official SPX closing print at 4:00 PM ET
2. Your broker settles positions in the after-hours session, usually by 6:00 PM ET
3. No separate ticker to watch — the SPX close is the settlement