Options on the GPW vs the USA - two different worlds

In the USA options are a retail market. In Poland it is an institutional, niche and illiquid market. If you move a strategy from YouTube in the USA onto the GPW 1:1, you will crash into the spread, the lack of single-stock options and European-style settlement. This lesson is a map of the differences and a profitability calculator.

Goal: after this lesson you know when to trade OW20 on the GPW, when to go to the USA, and how not to lose 30% of the premium to the spread.

The market map - facts without marketing

The conclusion: the GPW is a market for simple directional strategies and for hedging a portfolio of Polish stocks. The USA is a market for income strategies.

The hidden cost: the bid/ask spread

On SPY a spread of 0.02 on a 2.00 option = 1% of the cost. On OW20 a spread of 5 PLN on a 50 PLN option = 10% of the cost. For a 4-leg Iron Condor, the spread cost times four can be 40% of the max profit.

Entry cost formula:

Slippage cost = (Ask - Bid) / 2 * Multiplier * Number of contracts

GPW example:
OW20 Call 2200, Bid 45 PLN, Ask 52 PLN, Mid 48.5 PLN
You buy 1 contract at the Ask of 52 = you overpay 3.5 PLN vs mid = 3.5 * 10 = 35 PLN
You sell 1 contract at the Bid of 45 = you lose 3.5 PLN vs mid = 35 PLN
Round trip total = 70 PLN on a single contract
When the premium is 50 PLN, slippage = 140% of the premium on a bad entry.

GPW rule: Never a market order on WIG20 options. A limit at mid-price only, and wait. If it does not fill within 30 min, improve it by 1 PLN.

Measure GPW efficiency:

Effective credit = Mid credit - (Spread_put/2 + Spread_call/2) - Commissions
If the effective credit < 50% of the mid credit, the market is not suitable for the strategy.

Settlement style and assignment risk

USA stocks: American style = they can call you at any moment. The risks:

• A short call before the dividend = assignment, you lose the dividend
• A short put ITM on Friday = on Monday you have 100 shares in your account

GPW OW20: European style, cash settlement on the expiry day. No shares, only a transfer of the difference. There is no early assignment. That is an advantage: you can hold a short ITM position without the stress of being handed shares.

But: European style means there is no way to close early through exercise - you have to close the trade on the market. When liquidity is zero on the last day, you can get stuck.

In the USA the SPX index is also European, with section 1256 tax treatment in the USA (for a Polish resident it is 19% either way). SPXW has 0 DTE - paradise for Gamma scalpers, hell for beginners.

Strategies that work in a given place

GPW WIG20 - what makes sense:

• Long Call / Long Put as a hedge or a directional lottery ticket at 30-60 DTE
• Bull Put Spread / Bear Call Spread 50-100 pts wide, so that slippage < 10% of the credit
• Hedging a portfolio of Polish stocks: you buy a Put on W20 when you hold WIG20 stocks
• What does not make sense: a 20 pt wide Iron Condor (slippage will kill it), 0 DTE, the Wheel (no single-stock options), earnings strategies.

USA - what makes sense:

• All income strategies: Verticals, Iron Condor, Butterfly, Wheel, Covered Calls, Diagonal, LEAPS
• 0-7 DTE only for advanced traders, with automated risk management
• CSP and the Wheel on dividend stocks (JPM, KO, O, SCHD)

GPW vs USA decision:

If your capital is < 5k USD and you want to learn the mechanics of 1 contract: GPW demo + 1 OW20 contract, but treat it as education, not income.
If your capital is 5-15k USD and you want income strategies: the USA only, a margin account, 1-2 strategies (a Bull Put Spread or the Wheel on cheap stocks).
If you have a Polish stock portfolio of 100k+ PLN: the GPW for hedging WIG20, the USA for income from the surplus capital.

Never trade USA strategies on the GPW just because you "do not want to send money to the USA". It is a different market.

Currency conversion and Polish taxes - in practice

Trading in the USA as a Polish resident:

• Every closed position is a taxable event. Commissions reduce the income.
• You must convert USD to PLN at the National Bank of Poland (NBP) rate from the day preceding the close of the position.
• The PIT-8C from the GPW is simple. For the USA you have to settle it yourself in PIT-38.
• Dividends from Covered Calls and from USA assignments carry a 15% withholding tax (W-8BEN) + a 4% top-up in Poland.

Measure:

Real PLN profit = (USD revenue * NBP rate) - (USD cost * NBP rate) - PLN commissions - 19% tax
Real GPW spread cost = Commission + (Slippage)
Compare ROC after costs, not before.

When the plan says do not trade

1. When the spread on OW20 is > 10% of the option price and you want to run a 4-leg condor. You become a liquidity provider for the market maker, not a trader. Walk away.
2. When in the USA you have no access to real-time options data (OPRA). Trading on a 15-min delay is trading blind. Without live Greeks, do not trade income strategies.
3. When the GPW is rolling a series and the volume drops below 50 contracts a day on your series. You will be left with a position and no exit.
4. When the capital requirement on the GPW works out as WIG20 2300 * 10 = 23,000 PLN per contract, while your deposit is 5,000 PLN. You are on >4x leverage, one gap and you get a margin call.
5. When the USA is in earnings season and you have an open position on the GPW that you cannot hedge, because the GPW is closed at 16:50 while the USA runs until 22:00. Overnight gap risk without a hedge.

The mistakes that cost the most

A measurable exercise

Title: GPW vs USA cost comparison - 10 trades

1. Pick 2 strategies: a Bull Put Spread 5 USD wide on SPY and 100 pts wide on OW20, both 30 DTE, short Delta ~0.20.
2. For 2 weeks do not trade, just record every day: Bid/Ask/Mid price/Calculated commission/Mid credit/Effective credit after the spread for both markets.
3. Calculate: (Mid credit - spread/2 - commissions) / Max Loss for both. Which market gives the better real ROC?
4. In addition: check how many times the GPW spread is > 10% of the price versus the USA > 2%.

Pass criterion: 10 days of entries for the GPW and the USA + a calculated effective ROC. Final decision: for which strategy you pick which market for the next 6 months, and why (costs, not opinion).

Test yourself

1. Explain the difference between an American and a European option and give an example of the consequence for a covered call.
2. OW20 Call Bid 30 Ask 38, multiplier 10 PLN. What is the round-trip slippage cost in PLN versus the mid-price?
3. Why is a 20 point wide Iron Condor on WIG20 unprofitable despite the small max loss?
4. When is the GPW better than the USA for a Polish trader despite the lower liquidity?
5. How do you settle the tax on closing a Bull Put Spread on SPY at a USA broker as a Polish resident?

Frequently asked questions

Can I run the Wheel on the GPW through stock futures? No. Futures contracts on stocks (e.g. FW40) are not options. You will not sell a Covered Call on them in the option sense. The Wheel requires single-stock options. The GPW does not have them. You can build synthetics out of a stock + a WIG20 option, but that is not the same thing.

Do I need a large account for the USA? For defined-risk income strategies (a 5 USD spread) you need about 400 USD of margin per spread. A 5,000 USD account allows 2-3 spreads at once under the rule of at most 50% of buying power used. For the Wheel on expensive stocks you need more. Start with 1 spread, not 10.

Is trading on the GPW pointless? No. It makes sense for: learning the mechanics, hedging a portfolio of WIG20 stocks, simple long options as a cheap directional lottery ticket, and when you do not want currency risk. It does not make sense for income premium selling with 4 legs.

What about the hours? GPW vs USA? The GPW runs 9:00-16:50, so you can manage during the day. The USA runs 15:30-22:00 PL, which clashes with family life but gives you afternoon volatility. Pick the market that fits your day, so that you do not have to manage positions at night.

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Educational material. This is not investment advice or a recommendation. Every trading decision is your risk. Measure the spread, the multiplier and the tax before you measure the profit.

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