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Options on international or world index?
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Options on international or world index?

  #1 (permalink)
Trading Apprentice
Chicago, IL USA
 
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Options on international or world index?

I need to take out a large 60-day IRA rollover "loan" and want to hedge the risk of the market rising while my money is withdrawn. However, I can't find any options on international or world indices with any reasonable open interest.

The only index with options that I see is heavily traded is SPY, with tens of thousands of contracts for June alone. On the other hand, VT or VXUS have only a few dozen options issued. There must be somewhere with reasonable volume to trade options on international indices?

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  #2 (permalink)
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  #3 (permalink)
Market Wizard
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randomengineer View Post
I need to take out a large 60-day IRA rollover "loan" and want to hedge the risk of the market rising while my money is withdrawn. However, I can't find any options on international or world indices with any reasonable open interest.

The only index with options that I see is heavily traded is SPY, with tens of thousands of contracts for June alone. On the other hand, VT or VXUS have only a few dozen options issued. There must be somewhere with reasonable volume to trade options on international indices?

I am not sure why you need an international exposure when you live in the USA. Being international you have interest rate and foreign exchange risk, so I am not sure why you decided to go the international route. Second, products like VXUS are funds that have their own fees and risks, so even if the options market was a bit more liquid you are adding more variables you should consider as part of risk.

This is just a suggestion: Why not look at the Options on ES, FDAX, etc They are international stock indicies which may help you in achieving your goal. Finally, what you describe as a hedge, is a pure outright speculation, not a classic definition of a hedge.

Matt

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

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  #4 (permalink)
Trading Apprentice
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mattz View Post
I am not sure why you need an international exposure when you live in the USA. Being international you have interest rate and foreign exchange risk, so I am not sure why you decided to go the international route. Second, products like VXUS are funds that have their own fees and risks, so even if the options market was a bit more liquid you are adding more variables you should consider as part of risk.

Hi Matt:

There are a number of well-studied reasons why one should have international market exposure. I'm investing a market-cap weighted amount into international stock indices. Anyhow, that's all beside the point.


mattz View Post
This is just a suggestion: Why not look at the Options on ES, FDAX, etc They are international stock indicies which may help you in achieving your goal.

Unless I'm missing something, ES is the U.S. S&P 500. FDAX is Germany only; I need either options on a world index or excluding US.


mattz View Post
Finally, what you describe as a hedge, is a pure outright speculation, not a classic definition of a hedge.

I must not have been clear enough about my intentions. In a vacuum it would look like speculation, but I currently have a certain amount of money invested in US and international stock index funds. I said I need to withdraw the funds temporarily for a short-term loan.

Suppose world markets rise between the time I sold and the time I need to buy back the funds. That is a risk and it could be substantial. I want to hedge that risk; there's nothing speculative about it.

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  #5 (permalink)
Market Wizard
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I understand now what you are trying to do, and yes the fact that you have international exposure does change the picture a bit. However, even if there is a "world index" it would have to be weighted proportionally right to your exposure in terms of percentage allocated world wide by the funds. I understand why you insist on calling this a hedge, never the less, in the absence of the underlying asset that matches your exposure 1:1, it is an outright speculation.

Matt

There is a risk of loss in futures trading. Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #6 (permalink)
Trading Apprentice
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mattz View Post
This is just a suggestion: Why not look at the Options on ES, FDAX, etc They are international stock indicies ...

Hi Matt,

which US brokerage would let me short puts on ODAX (Fdax option) or ESTX50, FTSE....?

Thanks

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  #7 (permalink)
Market Wizard
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Forex37 View Post
Hi Matt,

which US brokerage would let me short puts on ODAX (Fdax option) or ESTX50, FTSE....?

Thanks

hello @Forex37
We can do these options via Wedbush, OEC or ADM.
Every single one of those allows SPAN margin, and according to how aggressive you get, we can find the right brokerage and platform for you. If you go to our home page, off the menu "Why Choose Optimus" and then "Multiple Clearing Options" where you could read about the different Options. We will dd another FCM shortly.

I hope this helps.

Matt
Optimus Futures

There is a risk of loss in futures trading. Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #8 (permalink)
Trading Apprentice
Zurich
 
Futures Experience: Intermediate
Platform: Amibroker
Favorite Futures: Fesx
 
Posts: 31 since Feb 2011
Thanks: 62 given, 11 received

Matt, thanks for your quick reply.

I`m really surprised, I`ve searched all over the US for an american brokerage offering eurex options on european indices. Spoke to OEC, who confirmed they wouldn`t offer such ( and added .. due to regulatory changes).

Thanks

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  #9 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
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Posts: 2,059 since Sep 2010
Thanks: 1,933 given, 2,782 received
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Forex37 View Post
Matt, thanks for your quick reply.

I`m really surprised, I`ve searched all over the US for an american brokerage offering eurex options on european indices. Spoke to OEC, who confirmed they wouldn`t offer such ( and added .. due to regulatory changes).

Thanks

You most welcome. I am not sure of the specifics for your account for OEC, but I will conform again if it is possible.
I suggest to try and use Wedbush via CQG technology/Q Trader to try and do these Options.
Please PM Me your email, and I will arrange for a demo for you.

Thanks,
Matt
Optimus Futures

There is a risk of loss in futures trading. Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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