SPX and SPY both track the S&P 500 index, but these two financial products have significant differences.

The products have different options settlement, contract sizes, and tax treatments.

If you are interested in trading the S&P 500, you must understand the differences between the SPX vs. SPY.

First, What is an Index

A stock index is a basket of stocks that may track the whole stock market or a specific market segment.

For example, the S&P 500 stock index seeks to track the top 500 large companies on the U.S. stock market.

The SPX ticker represents the S&P 500 free-float capitalization-weighted index. A cap-weighted index means the companies with the largest market caps are weighted the highest in the index.

Therefore, companies with the highest market cap will affect the index’s value the most.

What is an Index ETF

An index ETF (exchange-traded fund) is a fund that seeks to track the performance of a stock index, such as the S&P 500.

The SPY ETF is an S&P 500 ETF.

You can purchase shares of SPY to invest in the S&P 500 index, but you cannot buy shares of the SPX index itself. However, you can trade options on the SPX index to bet on its future prices.