A stock index option is a contract that gives its owner the right to buy (call option) or sell (put option) a stock index (a basket of stocks) at a fixed value until a specified date. Stock index options are offered on both options and on futures exchanges. Since 1983 when the first stock index option -- CBOE 100 options (now S&P 100 options) was introduced, the growth of stock index options has been rapid. Today, well-known indexes, including the S&P 500, the S&P 100, the NYSE Composite Index, the Nasdaq-100 Index, a series of Russell indexes, a variety of international and regional indexes, along with specialized indexes, have been listed on virtually all exchanges.
In the options world, these options work exactly like regular stock options except that an index rather than a particular stock is the underlying asset. Options of stock index futures have the futures contract as the underlying. All stock index options, whether traded on a futures exchange or an options exchange are cash-settled (delivered) versus physical settlement (delivery).