Historically, September has proven to be a challenging month for equity investors. Since 1950, the S&P 500 has experienced an average monthly decline of approximately 0.5% in September, making it the worst-performing month in terms of seasonal returns. With elevated macroeconomic uncertainty due to Federal Reserve policy, inflation, and this year's high geopolitical activities, September is expected to pose higher realized volatility.  For options traders, this environment can be viewed as an opportunity rather than a threat. While stock options pose a greater risk in times of higher volatility, index options trading could be a better alternative. The 5 indices that stand out among others and are clean choices for traders for the month of September are listed below:

S&P 500 Index (SPX)

The S&P 500 Index, which comprises the 500 largest publicly listed companies in the United States, serves as a benchmark for overall stock market performance. These corporations primarily serve as flag bearers for the stock market. People also use this index to learn about the firms' operations before investing in individual stocks within the broader market. Options trading on the S&P 500 Index offers investors exposure to a diverse portfolio of major U.S. firms, as well as the ability to hedge or speculate strategically. The S&P 500 Index is by far the most actively and heavily traded options index, with an average options volume of approximately 3.7 million and implied volatility of approximately 12%. Moreover, option traders prefer to bet on the future performance of the market rather than any individual stock, in order to hedge against risk. This is where the S&P 500 Index acts as a saviour for them.

SPX sits at the centre of the 0DTE boom with July 31 registering 4.8 million SPX contracts, the third most active SPX day ever. This type of volume allows the trader to scale defined-risk structures and exit when markets move.

Strategies:

• Intraday range trades can include 0-2DTE iron butterflies or iron condors that are sized small and harvested for a maximum profit of 25-50%.
• Event calendars play a key role, so FOMC weeks should be watched for selling front-week premium.

For smaller traders, the Mini-SPX (NASDAQ: XSP) also offers similar exposure with controlled risk, at 1/10th the size, making it a cost-efficient option. All in all, SPX and XSP continue to be the leaders of index options, providing unmatched liquidity and efficient execution.

Nasdaq-100 (NDX)

Nasdaq-100 has emerged as one of the top picks when it comes to index options, as it has become the epicenter of growth and technology trading. The NDX is far more volatile compared to the SPX, as it is concentrated largely in tech stocks such as Apple, Microsoft, NVIDIA, and Amazon. This volatility makes it an attractive choice for traders seeking large price swings. In September, NDX historically experienced increased activity due to macroeconomic catalysts, such as interest rate decisions and inflation data, which can impact sensitive tech valuations. With the advent of AI and the semiconductor industry's dominance in the 2025 market, NDX is preferred by both speculative traders and institutional hedgers.

Strategies:

• Debit spreads for directional plays and iron butterflies are recommended strategies for sharp IV shifts.
• Event calendars play a key role so straddles and strangles can be applied around major economic events such as CPI.

Dow Jones Industrial Average (DJX)

DJX is one of the oldest indices in the U.S. market. Although it only represents 30 large-cap companies, it is one of the favourites for traditional investors and financial media. This year, DJX gained more relevance due to its inclination towards defensive sector weighting, with healthcare and consumer staples having a significant influence. With an implied volatility of 16.71%, DJX is preferred by traders in September who seek lower-volatility exposure. Since Dow is price-weighted and not market-cap weighted, high-priced stocks like UnitedHealth and Goldman Sachs can have an outsized effect, which must be accounted for by the traders. DJX options will be ideal in September for traders who want to take advantage of themes like healthcare regulation and industrial spending, but on a volatility scale which is lower than indices like NDX.

Strategies:

• Protective puts can be implemented for long-term Dow exposure, and credit spreads can be used if traders expect range-bound movements.
• Collar strategies can be used to hedge while allowing partial upside.

Russell 2000 (RUT)

The Russell 2000 represents small-cap US stocks and differs significantly from other indices, such as the NDX or SPX, in terms of exposure. It tends to be more cyclical and volatile, and is significantly influenced by domestic economic trends, including consumer demand and credit availability. 2025 has been a slow year in terms of economic growth. Small-cap companies often underperform in weak macroeconomic conditions. In such a scenario, rather than investing in small-cap stocks directly, traders prefer index options as it help them to hedge and speculate on these themes. In 2025, slower GDP growth and sticky inflation has led to poor small-cap performance, leading to an increase in the importance of RUT options. Although RUT itself is large, MRUT, i.e., Mini Russell 2000, has also been gaining popularity for its easy accessibility to retail accounts. RUT is a perfect pick for traders who want to capitalize on September’s tendency to power small-cap moves.

Strategies:

• Event-driven volatility can help if we take advantage of calendar spreads.
• Traders who hold IWM ETF shares but want the tax benefits of RUT options can opt for covered calls.
• Small caps swing more significantly than large caps, and in such a scenario, debit spreads are often preferred.

CBOE Volatility Index (VIX)

The CBOE Volatility Index (VIX) is an index that measures the expected 30-day volatility in the S&P 500. VIX options are one of the most heavily traded contracts in the US as they allow traders to express their take on volatility. VIX options become highly attractive in September because of its events, like earnings release, FOMC week etc., which provide ample opportunities for volatile price movements. Unlike equity indices, the VIX often rises when the market declines, making it a popular hedge. In 2025, with geopolitical tensions and uncertainty around Federal Reserve rate cuts, traders can benefit by using VIX options to prepare for potential shocks. Liquidity in VIX options is consistently high, and they trade independently of SPX price direction, making them unique.

Strategies:

• Long calls or call spreads can be used to hedge against market drawdowns.
• Short puts can be used to benefit from a premium if the market declines.

September is correctly termed as trader’s month as weak returns, policy announcements, and various other macro catalysts tend to create volatility that favour the options lovers. In such a scenario, index options play a vital role due to their favourable tax treatments and strategic angles that traders can use to exploit and benefit from the market. September should ideally be the month where options trading is less dependent on prediction market direction and more dependent on structuring trades that harness volatility with risk minimization, to provide ultimate gains that traders can capitalize on.