The S&P 500 (more formally, the Standard and Poor's 500) is one of the most commonly followed indices available. It tracks the performance of 500 large-cap companies in the United States. It is considered the best benchmark for U.S. stock market performance because it represents the largest companies therein.
The SPY is an ETF which allows you to trade the S&P 500. You can trade stocks and stock options on the SPY. It also pays out dividends quarterly. The SPY will probably be better suited for smaller accounts compared to the SPX.
The SPX is an index for the S&P 500. It has about 10 times the value of the SPY. You cannot purchase shares and there are no dividends for the SPX. You can, however, trade options. In general, anything you can do with a stock option, you can do with the SPX.
In the charts below, SPY & SPX looks very similar, but notice the prices listed on the right. The current price listed for SPY is 409.62, while the current price for SPX is 4,102.20.
