European (SPXW) vs American (SPY) — settlement differs

SPXW is European and cash-settled (exercise only at expiry, settle in cash); SPY is American and physically settled (exercise anytime, deliver shares).

They look like the same “index options,” but different settlement makes backtest and live results diverge. Here is SPXW vs SPY.

Toggle SPXW vs SPY on the same ITM short put and see how settlement plays out at expiry.

European vs American (when you can exercise)

• ·European: exercise only at expiry, no early exercise. e.g. SPXW (SPX weeklys), most index options.
• ·American: exercise any time before expiry, early-exercise risk. e.g. SPY and single-stock/ETF options.

Cash vs physical settlement (at expiry)

• ·Cash-settled (SPXW): if ITM at expiry, you receive the difference in cash. No shares change hands.
• ·Physically settled (SPY): if ITM at expiry, real shares are delivered/received. A short call ITM means you must deliver shares.

Why it matters for backtesting

Hold an SPXW 0DTE put credit spread to expiry and settlement is simply intrinsic value (no extra closing spread). The same strategy on SPY must assume early-exercise and physical-assignment risk.

In NOSKA

NOSKA uses cash-settled European SPXW as its default symbol — settling at intrinsic value when held to expiry, and applying worst-side spread costs on mid-day exits.