NDX Index Options

Index scale and multiplier

NDX uses the full Nasdaq-100 level. The cash multiplier is $100 per index point. The scale of the underlying index and the multiplier are separate quantities; a smaller index level does not mean a different dollar multiplier.

These are cash-settled, European-style index options. They do not deliver a basket of stocks or ETF shares. Start with the market overview for the benchmark’s economic exposure.

Call and put example terms

The examples below use the contract price units and multiplier stated in this lesson.

Prices and premiums are hypothetical. The result measures expiry value and assumes any delivered position is closed at that price without additional movement or costs. It does not assume that every option settles in cash.

Buying ndx index calls

A call gives its buyer upside exposure to the specified underlying. For this example, use a strike of 20,000 price units and a premium of 300 price units. With the stated multiplier of 100, the premium cost is USD 30,000.

At expiration with the underlying at 20,800, intrinsic value is (20,800 − 20,000) × 100 = USD 80,000. After the premium, the gain is USD 50,000 before other costs.

At or below the strike, the call has no intrinsic value and loses its whole premium. Breakeven at expiration is 20,300 price units. At 20,150, the call is in the money but still loses USD 15,000 after the premium.

Buying ndx index puts

A put gives its buyer downside exposure. Assume the same 20,000 strike and 300-unit premium, costing USD 30,000 with the same multiplier. The equal call and put premiums are hypothetical, not a claim about actual market quotes.

At expiration with the underlying at 19,200, intrinsic value is (20,000 − 19,200) × 100 = USD 80,000. Subtracting the premium leaves USD 50,000 before costs.

At or above the strike, the put loses its full premium. Its breakeven is 19,700 price units. At 19,850, it is in the money but still loses USD 15,000 after the premium. Before expiration, time and implied volatility also affect the price; these expiry calculations do not predict its resale value.

The premium and the next position

A correct price view does not guarantee a profit. The move must be large enough and arrive before expiry to recover the premium. Before expiry, time remaining and implied volatility affect the price available when selling to close.

The premium limits the standalone purchased option’s loss. Exercise can create another position requiring funding or margin, and keeping that position introduces further risk. An uncovered seller can lose much more than the premium received.

The official settlement value matters

Exercise is restricted to expiry, but a holder can sell to close before then when a market is available. The applicable official settlement value determines the expiry payment.

Standard SPX and NDX families include series with different opening or closing settlement conventions. The selected series controls the last trading time and calculation.

Do not replace the official settlement value with the last number visible on a chart. An opening calculation can differ from the prior close or an intraday index reading.

Index options versus ETF options

A related ETF has its own share price, expenses and option contracts. ETF-option exercise generally delivers shares; these index options settle in cash. Identical-looking strikes on different products do not represent identical exposure.

See Index Options vs ETF Options. Choosing a smaller contract can reduce dollar exposure per lot, but fees and spreads still matter.

Sizing and expiration risk

Every point is worth $100 per contract, so modest point movements can have a substantial dollar effect. A long option can lose all its premium. An uncovered short option can create a much larger payment obligation.

A portfolio hedge can still be imperfect because the portfolio does not track the index exactly. Near expiry, price sensitivity can change quickly; cash settlement removes share delivery, not market risk.

Explore index options