Robinhood now offers index options for some of the more popular market indices, including the S&P 500 index (SPX), CBOE volatility index (VIX), S&P 500 mini index (XSP), Russell 2000 (RUT), and Nasdaq 100 (NDX).

You can find what’s currently available in the Index options list or by using the Search tool.

Unlike stock or ETF options, index options don’t have underlying shares. Additional key differences include:

• Trading hours and expiration differ from equity and ETF options
• No early exercise or assignment (index options are European-style and get exercised or assigned automatically if in-the-money at expiration)
• Cash only settlements (no delivery of shares)
• Taxes reported with 60/40 capital gains tax treatment
• Incur additional trading fees (contract fees and exchange fees)
• No dividends for index options

Trading hours for index options are 9:30 AM-4:15 PM ET (or 1:15 PM ET for half-days), Monday-Friday (excluding holidays), except on expiration dates:

• AM expirations: Trading stops at 4:15 PM ET on the last trading day before the expiration date.
• PM expirations: Trading stops at 4 PM ET (or 1 PM ET for half-days) on the expiration date.

Index options can expire at market open (AM-expiring options) or at market close (PM-expiring options). Within your Robinhood investing accounts, all AM-expiring options will include AM next to the expiration date.

Index options cannot be exercised or assigned early. If they’re in-the-money based on the settlement value on expiration date, they’re automatically exercised or assigned. Index options are also settled in cash, meaning your account will be debited or credited the corresponding settlement amount.

Some indices may have different root symbols depending on their expiration date and time. All root symbols for the same underlying index are grouped together in the same options chain on Robinhood.

For example, the SPX index has 2 root symbols: SPX options have an AM expiration and SPXW options have a PM expiration. Both SPX and SPXW options will show on the same options chain with consolidated expiration dates, as they are all based on the same SPX underlying.

Index options are defined by Internal Revenue Code (IRC) Section 1256 as non-equity options. Gains and losses for these types of securities are subject to a "60/40 split" for tax reporting purposes, regardless of how long you hold it:

• 60% of the gain or loss is taxed at the long-term capital tax rates
• 40% of the gain or loss is taxed at the short-term capital tax rates

In addition, Section 1256 option contracts are subject to an annual mark-to-market (MTM) process for all open positions held through the end of the calendar year. This means you'll recognize a gain or loss based on the fair market value (FMV) at the end of the tax year compared to your original cost basis. This gain or loss may be subject to potential taxes. Furthermore, the MTM process resets your cost basis to the FMV (higher or lower) for the following tax year. These options are also not subject to the same wash sale rules as equity options.

For more information about your specific tax situation, consult with a tax professional.