I'm currently working on a project using S&P 500 index options(European) data. I haven't done any empirical experiments before, so I'm confused how to find the corresponding risk-free rate and the dividend rate.
For risk-free rate, currently I'm using the 3-month Treasury yield curve rates. Here is the link: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2017
Some people mentioned we should use 1-year rate instead of 3-month rate. I'm not sure which one is more appropriate.
The dividend rate is far more confusing. I googled and someone said the S&P 500 index includes dividends, which means we should set dividend rate to 0. But I also find links of the S&P 500 dividend yield: https://ycharts.com/indicators/sp_500_dividend_yield#:~:text=S%26P%20500%20Dividend%20Yield%20is,month%20and%201.92%25%20last%20year.
My question is: How do we find the appropriate risk-free rate and dividend rate for S&P 500 index options?
Thanks for your help.