Educational only, not tax or financial advice. Tax treatment (including Section 1256) is complex and situation-specific — consult a qualified professional. Product specs and settlement rules can change; verify current details.
SPY, SPX, XSP, QQQ, and IWM all offer daily 0DTE options, and each trades a different mix of size, settlement, tax treatment, and volatility. There’s no universal best — here’s how to pick for your account and style.
The lineup at a glance
SPY — broad S&P 500, retail-sized, most liquid/tightest spreads, physically-settled (shares if held ITM). The default. SPX — full-size S&P index option (~10× SPY), cash-settled, possible 1256 tax treatment, but large per contract. XSP — Mini-SPX (~SPY-sized), cash-settled, potential 1256 tax, lighter liquidity. QQQ — Nasdaq-100, more volatile, tech-heavy. IWM — Russell small-caps, rate/sentiment-sensitive, volatile.
How to match one to you
Want maximum liquidity and simplicity? SPY. Larger account, want cash settlement + tax treatment? SPX. Want SPX-style settlement/taxes in a small size? XSP. Want more volatility / tech exposure? QQQ. Want small-cap, risk-sentiment volatility? IWM. Match the vehicle to your account size (SPX is large), your tax situation (index options may qualify for 1256 — consult a pro), your liquidity needs (SPY wins), and your volatility appetite (QQQ/IWM run hotter).
The “best” index is the one whose size, settlement, taxes, and volatility fit your account and temperament. SPY is the safe default; the others are deliberate trade-offs.
The default — and where NoVo fits
For most scalpers, especially starting out, SPY is the sensible default — unmatched liquidity, tightest spreads, and the deepest tool ecosystem — and it’s exactly what NoVo maps and executes. The others are worth graduating to for specific reasons (tax, size, volatility). The dealer structure and 0DTE discipline apply to all of them; NoVo masters SPY, QQQ and IWM — the three most liquid ETFs of the group.