Options contract size determines how many shares you control and how much capital you need. Understanding contract sizes is fundamental to position sizing, risk management, and knowing what you are actually trading.
Standard Contract Size
In the US, standard equity options represent 100 shares of the underlying stock. This is called the contract multiplier.
The 100x rule: When you see an option quoted at $2.50, the actual cost is $2.50 x 100 = $250 per contract. This multiplier applies to all standard equity and ETF options.
Why 100 Shares?
The 100-share standard dates back to traditional stock trading where 100 shares was a "round lot" - the standard unit for trading. Options adopted this convention for consistency.
Calculating Option Costs
Premium Calculation
Option quote: $3.50
Contract multiplier: 100
Cost per contract: $3.50 x 100 = $350
If buying 5 contracts: $350 x 5 = $1,750 total
Exercise/Assignment Value
Strike price: $50
Contract multiplier: 100
Capital needed for assignment: $50 x 100 = $5,000
For 5 contracts: $5,000 x 5 = $25,000
Mini Options
Mini options were introduced for high-priced stocks, representing only 10 shares instead of 100. However, most mini options have been discontinued due to low trading volume.
Mini Options History
- Launched in 2013 for AAPL, AMZN, GOOG, GLD, SPY
- Designed to make high-priced stocks accessible
- Failed to gain significant trading volume
- Most were delisted due to lack of interest
Current status: Mini options are largely unavailable. Stock splits (like Apple's and Tesla's) have made standard options more accessible on previously high-priced stocks.
Index Options Multipliers
Index options use a $100 multiplier applied to the index value, not shares:
SPX (S&P 500 Index)
Index value: 4,500
Multiplier: $100
Notional value: 4,500 x $100 = $450,000
One SPX contract represents $450,000 of exposure
Mini-SPX (XSP)
Index value: 450 (1/10 of SPX)
Multiplier: $100
Notional value: 450 x $100 = $45,000
One XSP contract represents $45,000 of exposure
Contract Size in Position Sizing
Understanding contract size is crucial for proper position sizing:
Delta Exposure
Delta measures price sensitivity per share. For a full position:
- Option delta: 0.50
- Contracts: 10
- Shares per contract: 100
- Total delta exposure: 0.50 x 10 x 100 = 500 shares
Dollar Risk
When the stock moves $1:
- Per contract (0.50 delta): $1 x 0.50 x 100 = $50
- For 10 contracts: $50 x 10 = $500 gain/loss
Adjusted Contracts
Corporate actions can create non-standard contract sizes:
Stock Splits
A 3-for-2 split might result in contracts delivering 150 shares at an adjusted strike price.
Special Dividends
Large special dividends can create adjusted contracts with unusual deliverables.
Always verify: When trading adjusted options, check the contract specifications. The deliverable may not be the standard 100 shares.
Comparing ETF and Index Options
SPY and SPX both track the S&P 500 but have different contract characteristics:
SPY Options
Multiplier: 100 shares
SPY price: ~$450
Notional per contract: ~$45,000
More accessible for smaller accounts
SPX Options
Multiplier: $100
SPX value: ~4,500
Notional per contract: ~$450,000
10x larger than SPY equivalent
Position Sizing Considerations
Account Size Impact
The 100-share multiplier means even "cheap" options represent significant positions:
| Option Price | Cost per Contract | 10 Contracts |
|---|---|---|
| $0.50 | $50 | $500 |
| $2.00 | $200 | $2,000 |
| $5.00 | $500 | $5,000 |
| $15.00 | $1,500 | $15,000 |
Assignment Capital
If assigned on a short put, you need capital to buy 100 shares per contract:
- $50 strike: $5,000 per contract
- $100 strike: $10,000 per contract
- $200 strike: $20,000 per contract
Size Your Positions Correctly
Pro Trader Dashboard helps you track position sizes and manage risk across all your options trades.
Common Contract Size Mistakes
Forgetting the Multiplier
A $1.00 option costs $100, not $1. This mistake leads to accidental over-trading or under-trading.
Underestimating Assignment Risk
Ten short puts at a $100 strike means $100,000 of potential stock purchases. Always calculate worst-case capital needs.
Ignoring Greeks Scaling
Greeks are quoted per share. Multiply by 100 for actual exposure per contract.
Summary
Standard US equity options represent 100 shares per contract. This multiplier affects premium costs, exercise values, and risk calculations. Index options use a $100 multiplier applied to the index value. Mini options are largely discontinued, but mini-index products like XSP provide smaller position sizes for index exposure. Always factor in the contract multiplier when calculating costs, managing risk, and sizing positions.
Learn more about call options and index options.