ISE FX Options

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International Securities Exchange introduced options on foreign currencies on Apr. 17, 2007. It currently offers trading in these currency pairs:

  • U.S. dollar/Australian dollar (AUX)
  • U.S. dollar/euro (EUI)
  • U.S. dollar/British pound (BPX)
  • U.S. dollar/Japanese yen (YUK)
  • U.S. dollar/Swiss franc (SFC)
  • U.S. dollar/Canadian dollar (CDD)
  • U.S. dollar/Brazilian real (BRB)
  • U.S. dollar/Mexican peso (PZO)
  • U.S. dollar/New Zealand dollar (NZD)
  • U.S. dollar/Swedish krona (SEK)

Each of these options products is currently proprietary to the International Securities Exchange.[1]

All ISE FX Options are cash-settled in U.S. dollars. This feature enables traders to follow a short, medium, or long-term trend in the FX market without buying and holding the underlying currency. As exchange-listed securities, ISE FX Options are very similar to equity and index options, with a similar risk profile depending on the trading strategies adopted, but unlike most FX futures, all currency pairs are quoted with the U.S. dollar as the base currency. Like other ISE products, ISE's FX options are regulated by the U.S. Securities and Exchange Commission (SEC), in contrast to the unregulated, over-the-counter FX market. [2]

Exercise and Quotation Structure[edit]

ISE FX Options use a European-style exercise, meaning they cannot be exercised early. Some market participants prefer European-style exercise as their trades cannot be lifted by early exercise as in American-style exercise.

In determining the structure of these options, ISE created a product that has a consistent treatment of the U.S. dollar convention across all currency types. In the traditional FX market, some currency pairs are inverted. However, with ISE FX Options, all currency pairs are structured with the U.S. dollar as the base currency (i.e., USD/EUR or USD/JPY). This structure makes trading more intuitive and facilitates use of existing options trading strategies. When evaluating a trade using ISE FX Options, an investor can just ask the question, “What is a dollar worth?”

So, for example, in the case of the U.S. dollar versus the euro, a dollar is worth about .75 euros. In the case of the US dollar versus the Canadian dollar, one U.S. dollar is worth about 1.15 Canadian dollars. Using this approach, it is easy for a trader to take a view on whether the dollar will appreciate or decline. If the dollar appreciates, the underlying rate increases. If the dollar declines, the underlying rate goes down. This quotation convention is different that most FX futures contracts.

The same logic can be applied when considering more advanced trading strategies such as spreads, straddles, condors and butterflies. The only strategy that is unavailable would be a covered call write as there is no matching tradable underlying.


Strike prices for ISE FX Options in most cases are in 50-cent increments. For example, the available strike prices for the USD/JPY pair may be 116, 116.5 and 117. Options trade on the March cycle and also offer the flexibility to take a longer-term view with options that may expand to as much as 36 months out, and do not need to be held until expiration, which provides the additional benefit of continuous two-sided markets.

Other contracts approved[edit]

ISE has received approval to list up to 19 U.S. dollar-based currency pairs, including the Chinese renminbi and Swiss franc. Approval for expanded offerings also includes major cross-rates such as the euro/Japanese yen.


Investors can access the FX market through their existing options-enabled brokerage accounts.