SPY Option Trading: 15 Essential Insights

We have received some questions about how to trade SPY options (SPY is the ticker code for the ETF that tracks S&P 500). To save ourselves time and help the readers, we have gathered a short summary of the most frequently asked questions about option trading in SPY. We have previously covered options trading in QQQ.

15 things you should know about option trading in SPY:

Are there options on SPY?

Yes, SPY has a huge options market and trades thousands of contracts a day. It’s a liquid market with a wide variety of expiration dates in the future. SPY is one of the most heavily traded ETFs and is the oldest ETF still trading.

How to day trade SPY options

Unfortunately, we don’t have any quick and easy guide to day trade options profitably. Day trading is hard, and we believe it’s even harder to make money in the options market. Remember, the derivative market is a zero-sum game. We believe day trading SPY options is a bad idea for 99.9% of all traders.

How do you master SPY options?

First of all, you need to have knowledge about options. Far too many traders enter the options market with a naive dream of striking it rich. You need both theoretical and practical knowledge. In option trading, you can lose money even if you are right about the market direction (due to the many factors influencing the price of an option).

The most important thing is to have a trading plan. What are you going to trade? Why are you going to trade? What is your strategy?

Part of the trading plan involves making sure you have a statistical trading edge. This is the most important element in trading!

The only way to find out if you have a statistical edge is to backtest (what is backtesting?) If you are new to trading and backtesting, you might be interested in our inexpensive backtesting course: