A few weeks ago we shared that index options were available in paper trading via Alpaca's Trading API. Today, index options are available for live trading through the our Trading API and dashboard! Available indexes include SPX, SPXW, VIX, VIXW, DJX, and XSP, with more coming soon.
We’ve long focused on API-first infrastructure for builders. We’ve extended that coverage to index options, so you can test strategies, confirm order handling, and validate expiration logic in paper before trading live.
How Index Options Work on Alpaca
The index options workflow includes a few key differences:
- Cash Settlement: Profit or loss settles in cash, so you do not take delivery of shares or hold a position after expiration.
- No Early Assignment: European-style exercise means a position cannot be assigned before expiration, and you can’t early exercise long positions.
- Tax Considerations: Certain broad-based index options may receive Section 1256 tax treatment, under which gains and losses generally receive 60% long-term and 40% short-term capital gain or loss treatment, regardless of holding period.*
Risks and Considerations
Options trading is not suitable for all investors and can result in significant losses. A few points are specific to index options and to this release:
- Paper results differ from live: Paper trading is a simulated environment. Fills, liquidity, latency, and order handling can differ from live trading.
- AM settlement timing: AM-settled contracts reference a value published after the open, so the final settlement value is not known at the close of the prior session.
- Order cutoffs: AM-settled contracts may have a morning cutoff for new orders on expiration day.
- Market data availability: Alpaca does not currently provide index data through its Market Data offering. Support for index market data is planned for a future release.
- Exchange fees: Index options carry exchange fees that differ from standard equity options. Review current pricing before trading live.
- Commissions: US-listed index options trades are subject to a $0.50 per contract fee in addition to the pass-through regulatory and exchange fees mentioned above.
Get Started with Index Options
To get started with index options, sign in to your account and read our step-by-step guide on how to trade equity and index options with Alpaca.
Still have questions? Learn more in the docs or contact us at [email protected].
*Tax information provided is general and for informational purposes only. It is not tax advice. Section 1256 treatment depends on your individual circumstances. Consult a qualified tax professional.
The content of this article is for general informational purposes only. Any symbols or examples shown are for demonstration purposes only and do not constitute investment advice or a recommendation to buy or sell any security. Alpaca does not recommend any specific security or investment strategy.
Certain index options may be subject to additional fees, including proprietary index option, exchange, regulatory, and other transaction-based fees. Fees may vary by index product and are subject to change. Please review the Brokerage Fee Schedule for current fees and additional information.
Options trading is not suitable for all investors due to its inherent high risk, which can potentially result in significant losses. Certain complex options strategies carry additional risk. Please read Characteristics and Risks of Standardized Options before investing in options.
All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. No investment strategy can guarantee a profit or achieve its intended objectives. Diversification does not ensure a profit or protect against loss. Investors should carefully consider their investment objectives, risks, charges, and expenses before investing.
The Paper Trading API is offered by AlpacaDB, Inc. and does not require real money or permit a user to transact in real securities in the market. Providing use of the Paper Trading API is not an offer or solicitation to buy or sell securities, securities derivative or futures products of any kind, or any type of trading or investment advice, recommendation or strategy, given or in any manner endorsed by AlpacaDB, Inc. or any AlpacaDB, Inc. affiliate and the information made available through the Paper Trading API is not an offer or solicitation of any kind in any jurisdiction where AlpacaDB, Inc. or any AlpacaDB, Inc. affiliate (collectively, “Alpaca”) is not authorized to do business.
Securities brokerage services are provided by Alpaca Securities LLC (dba "Alpaca Clearing"), member FINRA/SIPC, a wholly-owned subsidiary of AlpacaDB, Inc. Technology and services are offered by AlpacaDB, Inc.
This is not an offer, solicitation of an offer, or advice to buy or sell securities or open a brokerage account in any jurisdiction where Alpaca Securities is not registered or licensed, as applicable.
For additional information and disclosures, see Alpaca's Disclosure Library.
