The Philadelphia Stock Exchange (PHLX) offers U.S. dollar-settled options on the Australian Dollar (XDA), British Pound (XDB), Canadian Dollar (XDC), Euro (XDE), Japanese Yen (XDN) and Swiss Franc (XDS).

Do I need any special type of trading account or permissions to trade PHLX World Currency Options®?

PHLX World Currency Options® have been structured to be available for trading through any approved options account at a securities broker-dealer. Please consult with your broker.

What are the contract sizes for the New PHLX World Currency Options®?

In order to provide an easy-to-use foreign exchange trading vehicle, the underlying contract size is 10,000 units of foreign currency (1,000,000 for the Japanese Yen). The retail-sized contract, coupled with the U.S. dollar-settlement feature allows for simple calculation of option premium and profit and loss, the same as for index options. Unlike some other foreign exchange products like futures and options on futures where the contract sizes can be much greater, PHLX World Currency Options® are “Right Sized” for retail options and futures traders.

Am I ever at risk of having to deliver or taking delivery of a foreign currency if I am assigned these options?

No, since the options are U.S. dollar-settled, no delivery or receipt of foreign currency occurs.

What is the exercise style of PHLX World Currency Options®?

European-style. This means that they may only be exercised on the last trading day prior to expiration (usually a Friday). However, the options can always be bought or sold prior to expiration.

What are the trading hours for PHLX World Currency Options®?

9:30 a.m. to 4:00 p.m. Eastern Standard/Eastern Daylight Time (Philadelphia Time)

Where can I obtain quotes on these options? What symbols do I use?

PHLX World Currency Option quotes are available on all quote vendor services and should be easily obtained on your broker’s trading platform screen just as any equity or index option. Note that the symbols for the series available for trading are posted on the PHLX website at www.phlx.com.

Are charts on foreign exchange available?

Charts that illustrate foreign exchange/U.S. dollar rates are readily available on the PHLX website, many brokerage firm websites, and from market data vendors or news websites.

In trading these options, what am I looking for in the relationship of the foreign currency and the U.S. dollar?

For call options you would be forecasting that the foreign currency would strengthen vs. the U.S. dollar during the life of the option contract. For put options your forecast would be for the foreign currency to weaken vs. the U.S. dollar during the life of the option contract.

What kind of leverage do these currency options provide?

In the spot or cash currency trading markets, investors are often afforded considerable leverage with regard to amount invested vs. actual currency amount controlled. When dealing with options, the leverage is obtained through the premium paid for a long option position that defines the maximum risk of the position, while the highly leveraged cash currency trading exposes the investor to potentially unlimited risk.

An Example of a World Currency Option Trade:

This example assumes that the Euro spot rate is at 1.2806 at the time of the trade.

Strike Price: A Euro call is expressed as 128.0 – (the same as with index options, we move the decimal point two places to the right).

Premium: An investor buys one October 128.0 Euro call for 1.15 – premium (bids and offers) is made in terms of U.S. dollars per unit of foreign currency. Because the contract size is 10,000 Euros, premium is calculated with a $100 multiplier, so the premium of 1.15 costs $115.00.

Let’s say the Euro advances vs. the U.S. dollar to 1.3300 at option expiration, the call option value at expiration would be 5.00 or $500 (intrinsic value) (1.3300 minus 1.2800).

The call could be sold to close the position or be exercised.

The proceeds would be:

Proceeds from sale $500
Cost of the Option $115
Profit $385

Prior to recommending or trading the PHLX World Currency Option Product, be sure to contact your firm’s compliance department regarding registration, qualification and approval requirements at your firm.

This publication discusses Philadelphia Stock Exchange (PHLX) traded options issued by The Options Clearing Corporation (OCC). No statement in this publication is to be construed as a recommendation to purchase or sell a security or to provide investment advice. The information within this publication has been compiled by the PHLX for general information purposes only. Although every attempt has been made to ensure the accuracy of the information within this publication, the PHLX assumes no responsibility for any errors or omissions. Contract specifications are subject to change at the discretion of the PHLX. Additionally, all examples in this publication are hypothetical situations, used for explanation purposes only. Options are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of “Characteristics and Risks of Standardized Options.” Copies may be obtained from The OCC, your broker, or from any of the exchanges on which options are traded. A prospectus, which discusses the role of The OCC, is also available without charge upon request from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, IL 60606.

PHLX World Currency Options® is a registered trademark of the Philadelphia Stock Exchange, Inc.

Email this page

Products + Marketplace + Exchange + News + Publications + Calendar + Educational +
Site Map + Contact Us + Emergency Info