If you trade credit spreads, especially bull put spreads, you’ll eventually face a question that divides traders into two camps:

Should you use SPX or SPY? Both track the S&P 500, both are extremely liquid, and both offer excellent opportunities for income traders. Yet they behave very differently in practice, particularly when used for defined-risk strategies like bull put spreads.

This guide breaks down those differences in plain English. You’ll learn how SPX and SPY each handle risk, premiums, assignment, liquidity, and strike selection, and why SPX is commonly used in systematic credit spread strategies. By the end, you’ll know exactly which product fits your goals, experience level, and account size.

What’s the Difference Between SPX and SPY?

SPX and SPY often get mentioned in the same breath, but underneath the hood they couldn’t be more different.

SPX: The Institutional Benchmark

SPX options are tied directly to the S&P 500 index itself. They’re European-style (no early exercise), cash-settled (no shares exchange hands), and far larger in notional size. Institutions favour SPX because it behaves cleanly, offers large premium opportunities, and avoids many of the complications that come with share-based settlement.

SPY: The ETF for Everyone

SPY is the exchange-traded fund version of the S&P 500. Its options are American-style, physically settled, and trade in extremely high volume. Retail traders gravitate to SPY because the contract size is smaller, the fills are almost instant, and it’s perfect for practising credit spreads without committing large amounts of capital.

Both products track the same underlying index — but their structure makes them behave differently when used for bull put spreads.

Why Bull Put Spread Traders Care

Bull put spreads rely on a delicate mix of premium size, assignment risk, liquidity, strike width, and expiration behaviour. Even small differences between products can meaningfully change your outcomes.

For example:

• A strategy that works beautifully on cash-settled SPX might feel stressful on SPY because of early-exercise risk.
• A spread that pays $500 on SPX might only pay $50 on SPY, requiring different sizing and expectations.
• Managing and rolling spreads becomes smoother or more complicated depending on which product you choose.

That’s why understanding SPX vs SPY isn’t just trivia — it directly affects your income potential and how consistently you can apply your rules.

SPX Bull Put Spreads

SPX is the product professionals use when they want a clean, predictable environment for premium-selling strategies. Here’s why.

Why Traders Love SPX

SPX’s biggest selling point is that it’s cash-settled, which means you can never be assigned 100 shares of anything. At expiration, the spread simply resolves in cash. This instantly removes one of the most stressful parts of trading credit spreads: the fear of unexpected assignment.

Another advantage is consistency. SPX moves smoothly because institutions dominate its order flow. This “cleaner” price action makes it easier to identify support levels and evaluate risk.

Finally, SPX offers larger premiums. A typical $10-wide SPX bull put spread might yield around $5.00 credit ($500 max profit), creating meaningful income potential for traders who want stable, repeatable returns.

Where SPX Can Be Challenging

The downside is simply size. A single SPX contract can represent a large notional position, which means the spreads are not ideal for very small accounts. Bid-ask spreads can also look wide to new traders, even though real-world fills are often excellent.

SPX is powerful, but it demands that traders size appropriately.

SPY Bull Put Spreads

SPY opens the door for traders who want all the mechanics of SPX spreads but at a fraction of the size.

Why Traders Choose SPY

SPY’s greatest advantage is accessibility. Because the contract size is much smaller, traders with modest accounts can build spreads that fit their comfort level. Liquidity is almost unmatched, meaning your fills happen fast and with very tight bid-ask spreads.

SPY is also ideal for learning. Beginners can practise with $1 or $5-wide spreads, test rolling techniques, and build confidence without risking hundreds of dollars per trade.

Where SPY Has Drawbacks

SPY’s American-style exercise means early assignment is possible. This usually happens around dividend dates or when the short strike is deep in the money. For many beginners this creates unnecessary anxiety.

Premiums are also smaller. While this is fine for practice, traders seeking meaningful monthly income often find SPY too small unless they trade multiple spreads simultaneously.

Which Is Better for Bull Put Spreads?

The best product depends completely on your goals.

If your focus is income, efficiency, and smooth execution, SPX typically wins.
If your focus is flexibility, small sizing, and learning safely, SPY usually comes out ahead.

But the difference goes deeper:

• SPX offers a cleaner, more predictable experience — ideal for rule-based or automated systems.
• SPY offers a forgiving environment where you can learn, experiment, and scale gradually.

Real SPX Bull Put Spread Example

Let’s break down a typical SPX trade — the kind we regularly execute in Monthly Trend.

Underlying: SPX at 5,500
Sell: 5,550 put
Buy: 5,540 put
Spread width: $10
Credit received: $5.00 ($500 max profit)
Max loss: $500
Stop loss: $7.50 (keeps practical risk closer to $250)
Breakeven: 5,545

This structure offers predictable risk, high credit, and a smooth expiration because SPX settles in cash. You don’t worry about assignment, exercise, or managing unwanted shares.

A similar SPY spread might bring in only around $0.50 credit — perfectly fine for practice, but not as efficient for income generation.

Which Should Beginners Start With?

If you’re just learning how credit spreads work, SPY is an excellent starting point. The smaller contract size lets you build spreads with very limited risk, and the liquidity creates a forgiving environment for entry and exit.

Once you have experience, and especially if you want consistent monthly income, SPX becomes the natural upgrade. The ability to avoid assignment risk altogether and collect larger premiums is a major benefit, especially if you follow a systematic approach.

A good rule of thumb is:

• Start with SPY to learn the mechanics.
• Move to SPX when you want professional-level efficiency and smoother execution.

In other words:
SPY helps you learn. SPX helps you earn.

SPX vs SPY: Quick Comparison Table

Related Guides & Next Steps

To continue building your skills:

• How to Set Up a Bull Put Credit Spread (Beginner Guide)
• Bull Put Spread Strategy: Setup, Risks & SPX Example

If you’d like to automate everything you just learned, from strike selection to exits, try our Monthly Trend service. It executes the same SPX bull put spreads we’ve used for years, removing guesswork and emotion.