Monday, October 20th, 2014

ADR Stock Options Trading

 

Many investors and day traders find profit in foreign stocks. They typically trade these stocks in US markets via American Depository Receipts also referred to as ADRs. If you would like some useful stock option trading information regarding ADR stock options trading read on.

Where Do You Go for ADR Stock Options Trading?

ADR stock options trading takes place on the Chicago Board Options Exchange, CBOE. There are many exchange traded funds (ETFs) designed to track foreign stocks. Examples are iShares® MSCI Australia Index Fund – EWA, SPDR S&P China ETF – GXC, or Vanguard European ETF – VGK. ADR stock options trading provides access to foreign markets but with the transparency and protection of trading in the USA. ADR stock options trading with these ETFs means that Securities and Exchange Commission rules apply. These funds and the various foreign derived ADRs must comply with SEC rules governing accessibility of information and transparency. How to trade options on an ETF containing ADRs is same as trading options on individual stocks or ETFs.

A List of ETF for ADR Stock Options Trading

  • BKF – iShares MSCI BRIC Index Fund
  • DGT – streetTRACKS® – DJ Global Titans Index Fund
  • EEB – Claymore/BNY BRIC
  • EEM – iShares® MSCI Emerging Markets Index
  • EFA – Options on iShares® MSCI EAFE® Exchange Traded Fund
  • EWA – iShares® MSCI Australia Index Fund
  • EWC – iShares® MSCI Canada Index Fund
  • EWD – iShares® MSCI Sweden Index
  • EWG – iShares® MSCI Germany Index
  • EWH – iShares® MSCI Hong Kong Index
  • EWI – iShares® MSCI Italy Index Fund
  • EWJ – iShares® MSCI Japan Index
  • EWL – iShares® MSCI Switzerland Index Fund
  • EWM – iShares® MSCI Malaysia Index Fund
  • EWP – iShares® MSCI Spain Index
  • EWS – iShares® MSCI Singapore Index Fund
  • EWT – iShares® MSCI Taiwan Index Fund
  • EWW – iShares® MSCI Mexico Index
  • EWY – iShares® iShares MSCI South Korea Index Fund
  • EWZ – iShares® MSCI Brazil Index Fund
  • EZA – iShares® MSCI South Africa Index
  • FXI – iShares FTSA/Xinhua China 25
  • GXC – SPDR S&P China ETF
  • HAO – Claymore/AlphaShares China Small Cap Index ETF
  • QDF – BLDRS Emerging Markets 50 ADR Index Fund
  • VGK – Vanguard European ETF

Foreign Stocks and Currencies

Foreign stocks in their own markets are not denominated in US dollars. In order to sell their stocks on US markets, foreign companies go through the steps of registering their stocks as American Depository receipts. This means that one can buy and sell the ADRs in US dollars. Likewise, ADR stock options trading takes place in US dollars. A factor to always keep in mind with ADRs is that the value of the stock in US dollars will typically vary with the exchange rate between the US dollar and the home currency of the stock. That is to say if the price of XYZ stock in Germany remains the same in Euros but the Euro goes up ten percent versus the US dollar, the price of the ADR will likely rise by ten percent even though the home price of the stock in question did not change. Many who engage in ADR stock options trading follow the same fundamentals as those who engage in Forex options trading.

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