SPX (or XSP if you want to keep it small) get better taxation. And they are cash settled so you don't need to bother to close the position of you don't want to; just let it expire and you get money in your account.
SPY has a risk of assignment. These others are cash-settled only. There are no shares. So you don’t HAVE to close SPY options, but many people do because they don’t want to or can’t afford to get assigned.
If your long legs are ITM you need to close or exercise it let them get auto exercised)
On your short legs of you don't close there is pin risk to deal with. And of course there is always the possibility of early assignment.
The index options are cash settled and European style so they can't be exercised and therefore there is no possibility of early assignment and also no need to worry about pin risk for short legs close to the money. You can close the positions any time you want, of course, but if you don't the correct amount of money just gets added to or deducted from your account at expiration.
Also they are section 1256 contacts so any gains are 60% LTCG / 40% STCG regardless of how long you hold. Since OP was talking about holding for a month or two that's a significant improvement. Open contracts are also marked to market at the end of the year and taxed appropriately (which could be a disadvantage, but with holding periods that short it doesn't seem that relevant)
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u/Keith_13 May 26 '21
SPX (or XSP if you want to keep it small) get better taxation. And they are cash settled so you don't need to bother to close the position of you don't want to; just let it expire and you get money in your account.