Micro is having a moment. Low capital, high flexibility, and tons of, well, options. The Nasdaq-100 Micro Index Options (XND®) can help add some spice (read: diversification and precision) to your investing strategy. Make a micro move.
Micro is back, baby. But we aren’t talking about micro mini shorts (this time). We’re actually talking about the micro index, a small-scale index that tracks a specific segment of the stock market.
And what do you get when you offer low-cost investment options based on those specific, small-scale market segments? A fancy-schmancy micro index option, a hot, low-capital way to invest.
Got some dollars to invest? We teamed up with Nasdaq to see if these li’l guys might be right for you.
Cash settlement
Let’s *not* get physical. Because with micro index options, no physical shares or assets are exchanged between the buyer and seller. Instead, settlements are made entirely in cash. The amount you get is based on the difference between the option’s strike price and the actual closing value of the index on expiration.
That’s how micro index options help keep investing simple. No need to worry about delivering those assets. Just pick your index option of choice and watch it automatically settle, in cash, at the time of expiration.
Euro vibes only
No bald eagle sound effects needed here. Micro index options are European style, meaning they cannot be assigned ahead of their expiration date. (One less thing to worry about.)
So, if you’ve got a little $$$ to spare and want to keep your investing simple, micro index options might be what you need. Plus, cash settlement keeps things “uncomplicated.” Set it and forget it? Yes, please.
Go granular
Micro index options have granular expiry cycles, meaning they expire on a certain schedule (like quarterly, monthly, weekly, or daily) but always with settlement at market close. Traders like you can pick exactly when you want your options to expire (based on the schedule, of course).
It’s like a sweet spot for managing exposure. You’re not stuck waiting on one specific expiration date, but you don’t have to watch the market like a hawk. Just peruse the expiration schedule and pick the date that works for you.
Catch a tax break
Micro index options can also offer a nice tax perk for those who qualify. Their potential tax benefits include a 60/40 capital gains tax rate (which lowers the taxes on your profits).
Let us explain: The potential tax benefits are extended independent of the holding period. An index option that you hold for one day gets the same tax treatment as one held for a year and a half (long-term).
Weigh your options
If micro index options sound like the right option for you, here’s one you should consider: Nasdaq-100 Micro Index Options (XND®). These options are based on the Nasdaq-100 Index (NDX®), at 1/100th of the value, to be exact. XND® index options are:
- affordable, thanks to lower capital requirements and smaller-sized contracts
- flexible, thanks to granular expiry cycles (remember those?)
- even more flexible, with monthly and weekly PM settlements for you to choose from
Ready to go smaller? XND® index options give you a little more precision, control, and efficiency than your average micro index option—without sacrificing the tax benefits, expiration choice, or strategy.
Go small or go home
Micro index options, like XND® index options, pack a pretty big punch in their tiny package. They offer uber-precise market exposure, have low capital requirements, and come with lots of flexibility—with some potential tax benefits thrown in for good measure.
Whether you’re new to options or just trying to choose the best one for your financial situation, these micro index options can help you invest more precisely without getting too complicated with your investing strategy.