Thinking Globally. Navigating the dollar with FX options. By Steve Meizinger

Transcription

1 Thinking Globally Navigating the dollar with FX options By Steve Meizinger Steve Meizinger is director of education at the International Securities Exchange (ISE). He has over two decades of experience as an options specialist at several leading exchanges, including the NYSE, PHLX and AMEX. Meizinger has traveled extensively throughout North America teaching courses on equity, index and forex option trading. He is also a toprated instructor and author in the Options Industry Council, the U.S. options industry s education resource. His recent writings include contributions to Profit & Loss, Sentiment magazine, SFO and StreetIQ.

2 Currency exposure by which we mean the value of the U.S. dollar relative to other major currencies around the world is one of the most often overlooked contributors to investor returns. That s especially true today, as investors of all types are pouring an increasing amount of assets into international and emerging market equities, embracing a range of academic studies showing that international diversification can lower risk in a portfolio. As international allocations increase, however, the strength or weakness of the U.S. dollar relative to the local currency is having an increasingly large impact on total portfolio returns. Today s investors need to consider their currency exposure when investing in foreign assets. Several tools exist in today s marketplace to accomplish this objective. What Drives The Value Of The Dollar? The forces that drive the relative value of currencies are incredibly complex. Factors such as economic growth as measured by GDP, retail sales, industrial production, unemployment, capacity utilization and a country s producer and consumer prices have a substantial impact on the value of an individual country s currency. At the same time, the U.S. dollar the currency that U.S. investors are most concerned with is even more complicated than most. The U.S. dollar is often referred to as the world s reserve currency, meaning that many governments and institutions hold significant quantities of the dollar as part of their foreign exchange reserves. This reserve status makes the dollar the de facto international pricing currency for products traded on a global market, including oil and gold. It also makes the dollar the de facto safe haven asset for investors worried about the economy. In 2008, investors were forced to flock to the few safe haven currencies, and the U.S. dollar was pushed to new heights amid the global recession despite the poor performance of the U.S. economy. More recently, there have been calls from China to replace the greenback with a new global currency, reflecting developing nations growing unhappiness with the U.S. role in the world economy and their financial dependence Figure 1 on the U.S. This has put into question whether the USD will be able to retain its reserve currency status over the long term. Any break from the dollar s tradition as reserve currency for the world would put pressure on the greenback. What else impacts the value of various currencies? Obviously, political stability plays a role, but to what extent? An investor can only speculate. Government debt levels are also important, but currency valuations are a product of many factors, not just a single input. How are governments reinvesting those funds? Are they spending the capital in a productive manner? A symbiotic relationship exists between these critical fundamental factors and the currency markets. Calculating Currency Pairs Ideally, a strong currency creates confidence, retains its purchasing value and keeps interest rates at levels that sustain economic growth but do not ignite inflation. Although currencies are continuously priced 24 hours each trading day, their value is determined in comparison with another currency. A currency cannot be bought in isolation. It must be bought (or exchanged) with another currency; thus the term currency pair. Ultimately, global supply and demand determine the valuation of each currency pair. Currency pairs are constructed with a base currency and a quote, also known as a countercurrency. This relationship is expressed by dividing base currency by quote currency (or currency pair = base currency/quote currency); in other words, how many of the base currency are required to get the quote currency. For example, USD/CAD 1.12 means that one USD is exchanged for 1.12 Canadian dollars. Similar calculations can be made with the other currencies. Currency traders refer to such terminology as USD weakness or USD strength, risk appetite vs. risk aversion, the carry trade, liquidity, currency flows, green shoots or brown weeds, quantitative easing, and central bank intervention ; all concepts that also impact asset pricing in other markets. Currencies are the measuring tool to price all other markets. Learning more about these terms and their significance will assist investors, regardless of the asset class(es) they trade. Index Region Source: Bloomberg (as of Aug. 31, 2009) % Nominal Return (YTD 2009) Major Indexes In Local Currency And USD % Return Currency Adjusted U.S. $ (YTD 2009) % Nominal Return (2008) % Return Currency Adjusted U.S. $ (2008) Per US $ ISE Symbol In U.S. $ ISE Symbol S&P 500 U.S DJ Euro Stoxx Europe USD/EUR EUI EUR/USD EUU FTSE U.K USD/GBP BPX GBP/USD GBP DAX Germany USD/EUR EUI EUR/USD EUU SMI Switzerland USD/CHF SFC Nikkei Japan USD/JPY YUK SP/ASX Australia USD/AUD AUX AUD/USD AUM SP/TSX Canada USD/CAD CDD

3 Influence Of Currencies On Portfolio Returns Investors putting money to work overseas must be cognizant of their foreign exchange rate risk. Assuming they want to repatriate capital sometime in the future back to their native currency, nonlocal investors must manage for two different risk factors when investing in foreign assets: (1) the return on the asset, and (2) the change in the exchange rate for the currency the asset is denominated in relative to their local currency. To calculate your rate of return in USD, the following formula is used: Rate of Return = (Currency value at end of period/currency value at beginning of the period * Investment value at end of period (local currency) + Income/Investment value at end of period (local currency)) 1.00 Figure 1 shows the index returns of various popular national equity indexes for 2008 and YTD The local return is the index result for local investors, excluding currency fluctuations. The currencyadjusted returns incorporate the impact of currency fluctuations on the investment for a dollardenominated investor. The evidence is clear: Foreign currency rates have a dramatic impact on returns, especially in shorter investment periods when there is less time to revert back to a longerterm mean price. In 2008, U.S. investors who invested in the U.K. experienced the most adverse devaluation of the pound relative to the USD of the six major currencies studied. The movement had a significant head wind impact on equity returns. The FTSE 100 Index was down percent. Considering the devaluation of the pound relative to the USD, however, U.S. investors actually experienced a percent drop in their FTSE investments. More recently in 2009, the FTSE 100 Index was up nominally percent (as of Aug. 31, 2009) but in currencyadjusted terms, the GBP s rise against the USD had a rate of return of percent. Currencies cut both ways. The relative performance of currencies can significantly impact investors portfolios. In 2008, U.S. investors saw their international investments currencyadjusted rate of return worsened by a weaker foreign currency relative to the USD. Conversely, in 2009, most international investments have created a tail wind impact for U.S. investors, where the stronger foreign currency, relative to the USD, added to their portfolios returns. Obviously, currency rates can affect your portfolio s returns both ways. U.S. investors who invested in Japan experienced the most favorable currency adjustment. Due to the Japanese yen rise against the USD in 2008, U.S. investors only suffered a total return loss of percent in their portfolio, better than the percent of the Nikkei for local investors. However, in 2009, U.S. investors in Japan experienced a slightly unfavorable currency effect due to a slightly weaker JPY relative to USD. The nominal performance of the Nikkei Index was up by percent, but adjusting for a weaker JPY created a percent currencyadjusted return for U.S investors. It s not clear that all investors want to hedge out this currency risk. Studies suggest that part of the diversification benefit of overseas investment comes precisely from the currency impact. But some investors will want to hone in on just the equity base returns. Others may want to amplify that exposure. It all depends on your particular investment strategy. What Is The Purpose Of The FX Market? The original purpose of the FX market was to facilitate trade between various countries. If an importer/exporter has an imbalance of one currency relative to another, the spot, or cash, market could be used to regain their desired level of equilibrium. More recently, the spot FX markets have been facing increased regulation, which has led to considerable consolidation among retail spot FX trading providers. Currency derivatives are traded through several different types of markets and exchanges. The spot market also known as the cash market is the quoted price between the two currencies, traded in a currency pair. This market has no physical exchange, since it resides on the desktops of the major money center banks around the globe, and represents the underlying for all currency derivatives traded either on an exchange or over the counter by banks. Figure 2 A Sample Of ISE Pair Values ISE Per US $ Symbol Rate In US $ Symbols Rate Values ISE Value USD/AUD AUX AUD/USD AUM USD/GBP BPX GBP/USD GBP USD/CAD CDD CAD/USD N/A N/A USD/CHF SFC CHF/USD N/A N/A USD/EUR EUI EUR/USD EUU USD/JPY YUK JPY/USD N/A N/A USD/MXN PZO MXN/USD N/A N/A USD/NZD NZD NZD/USD NDO USD/SEK SKA SEK/USD N/A N/A Source: FXOptions.com/quotes (as of Aug. 31, 2009)

4 Figure 3 Profit / Loss Source: Optionseducation.org Figure 4 Profit / Loss USD/CAD (CDD) (Bullish On U.S. Dollar) Buy A Call: 113 CDD Call Source: Optionseducation.org ISE Pair Value USD/CAD (CDD) (Bearish On U.S. Dollar) Buy A Put: 113 CDD Put ISE Pair Value The futures market allows investors to exchange one currency for another at a specific date in the future at a certain price (the exchange rate) that is fixed on the original trade date. The Chicago Mercantile Exchange and Euronext.liffe are two exchanges that trade foreign exchange futures. An alternative for investors who are concerned with targeting their own level of foreign currency equilibrium are foreign exchange options, available at the Chicago Mercantile Exchange, the International Securities Exchange (ISE) and the Philadelphia Stock Exchange, which allow investors exposure to currency exchange rates with the ability to limit the risk of any single options position. How Are ExchangeTraded FX Options Different? Exchangetraded options are bilateral contracts giving the holder the right, but not the obligation, to buy or sell a particular asset at a specified price and date. Buyers pay premiums to obtain those option rights, enabling the buyer to enter into a limited risk transaction. Sellers of option contracts receive the premiums, but in return, receive obligations and (theoretically) unlimited risk. The exercise price is the price at which the underlying asset can be bought or sold by exercising the option. The expiration date determines the length of time the option rights and obligations exist. Exchangetraded options are standardized with similar expiration dates, strike prices and delivery procedures using a central clearing corporation called The Options Clearing Corporation (OCC). The OCC provides a vital function by acting as a guarantor. It ensures that the obligations of the contracts are fulfilled. When trading options, it s important to know what the base currency (underlying) is in relation to the quoting currency; for instance, what is the value of the U.S. dollar vs. the euro (USD/EUR), or, what is the value of the euro vs. the U.S. dollar (EUR/USD)? Regardless of the underlying, FX options offer investors the ability to control their exposure to that base currency (i.e., USD) for a specified period of time, at a certain strike price relative to another currency. For example, if you are bullish on the USD, you can purchase calls (the right to buy the USD exchange rate). Alternatively, if you are bearish on the USD, you can purchase puts (the right to sell USD exchange rate). How Are Options Premiums Determined? Option premiums are determined by the expectations of the market. If the market expects significant movement of the USD relative to other currencies, implied volatilities might be higher, translating into higher option premiums. If the market expects less movement of the USD relative to other currencies, implied volatilities might be lower, translating into lower option premiums. There are many strike prices available for trading. Although expiration months extend out as far as 10 months, shorter periods are also available. Two types of options exist: European and Americanstyle options. Americanstyle options can be executed at any time, while European options can only be exercised on expiration. Investors can always sell positions in Europeanstyle options, however, so it is not the case that Europeanstyle options necessarily lock investors into a position for a fixed holding period. Among the three exchanges offering FX options, the ISE and PHLX offer European options, while the CME lists both European and Americanstyle FX options. The options market relies on arbitrage to create efficient and liquid markets. Options pricing models create theoretical values that allow market participants to form their own expectations of the options marketplace. The pricing models require the asset price (i.e., the current exchange rate), strike price, time left until expiration, interest rate differential of the two currencies, and, most importantly, a volatility input to create a theoretical option value. The value is an estimate, not a guarantee, due to the changing inputs. Since ISE and PHLX FX options are cashsettled at expiration, any options that have intrinsic value at expiration will be paid by the sellers of options to the buyers. This means that investors do not have to be concerned with taking physical delivery of another currency at the end of the options life. In addition, investors can still have the financial exposure to any currency during the term of the option. The OCC facilitates the exercise process in conjunction with an investor s equity options broker.

5 Calls Or Puts: Which Option Is Needed To Implement A Forecast? When trading foreign currency options, you need to be aware of the trading convention, since foreign currency trading is always based on the relationship of one currency relative to another. A simple way to remember which type of option you would need (either calls or puts) is to focus on the base currency. In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is termed the quote currency, or countercurrency. Exchange rates are quoted per unit of the base currency. Options prices are derived from the base currency relative to the quote currency. If you are bullish on the base currency, you can purchase calls; if you are bearish on the base currency, you can purchase puts. Benefits Of FX Options The primary benefit of options trading is the versatility of the product. Leverage can be created based on your goals and risk tolerance. The options market allows you to approach the market in a variety of ways: Purchase calls (bullish on the base currency): A simple bullish forecast on the currency pair. Purchase puts (bearish on the base currency): A simple bearish forecast on the currency pair. Debit call spreads (bullish on the base currency): A multipleleg investment, where an investor simultaneously purchases a call option with a lower strike price and sells an option with a higher strike price. The debit call spread allows the investor to profit on a moderate rise in value of the currency pair, while capping the total upside. Debit put spreads (bearish on the base currency): A multipleleg investment, where an investor simultaneously purchases a put option with a higher strike price and sells an option with a lower strike price. The debit put spread allows the investor to profit on a moderate fall in the value of the currency pair value, while capping the total upside. Credit call spread: A multipleleg investment, where an investor simultaneously sells a call option with a lower strike and purchases an option with a higher strike. The credit call spread allows the investor to target income with a bearish view on the currency pair value with limited risk. Credit put spreads: A multipleleg investment, where an investor simultaneously sells a put option with a higher strike and purchases an option with a lower strike. The credit put spread allows the investor to target income with a bullish view on the currency pair value with limited risk. Volatility positions such as straddles and strangles and other more intricate positions can be created if an investor believes the currency pair value might make a large move but is uncertain in which direction. The options trading terminology straddles and strangles refer to purchasing both puts and calls and hoping for a large move in the currency pair value. Figure 5 Profit / Loss Puts And Calls On CDD At Various Strike Prices Source: FXOptions.com/quotes (as of Aug. 31, 2009) Figure 6 Strike Example: USD/CAD (CDD) (Bearish On U.S. Dollar) Buy A Debit Put Spread Source: Optionseducation.org 5Mo Call Price Mo Call Cost ISE Pair Value 5Mo Put Price Mo Put Cost 103 $11.00 $97,900 $1.10 $ 9, $ 7.30 $64,970 $2.35 $20, $ 4.40 $39,160 $4.45 $39, $ 2.50 $22,250 $7.50 $66, $ 1.35 $12,015 $11.30 $100, The long straddle is defined as the purchase of a long call and long put usually very close to the currency pair value; hence, the term straddle. The long strangle is defined as the purchase of outofthemoney calls and outofthemoney puts. Normally the straddle or strangle position is implemented with similar expiration months. The worstcase scenario for the purchase of straddles or strangles is a lowvolatility market, in which case, most of (or all of) the premium paid might be lost. Hedging of currency exposure: Hedging currency exposure can be implemented by referring back to the base and quote currencies. If the USD is the base currency and you are looking to hedge your USD exposure, you would purchase puts. If the USD is the quote currency and you are looking to hedge your USD exposure, you would purchase calls. All of these options strategies can be implemented using an equity options brokerage account. FX Options Strategies Illustrated: The Simplest Example The most straightforward FX options strategy would be purchasing a call (increasing USD) or a put (decreasing USD) to express a view on upward or downward currency movement. If an investor were pursuing a limited risk strategy and perceived the underlying rate might move a certain

6 Figure 7 Profit / Loss Example: USD/CAD (CDD) (Bullish On U.S. Dollar) Buy A Debit Call Spread Source: Optionseducation.org ISE Pair Value amount by expiration, purchasing FX options calls or puts could be a logical options strategy. The returns patterns of these positions are illustrated in Figures 3 and 4. In each case, as shown, purchasing the option creates a fixed maximum loss with unlimited upside. The maximum loss is equal to the cost of purchasing the position. Selecting The Strike Price Which strike should you select? The selection of strike price is normally based on the concept of leverage. If you were extremely bullish on USD, you might consider purchasing an outofthemoney (OTM) call option. These options are less costly, but they also have the lowest probability of success. A bullish investor who was willing to purchase less leverage (think a moderate upward change) might purchase atthemoney (ATM) call options. Another alternative for bullish USD investors would be inthemoney (ITM) options, which have an even higher nominal dollar cost, but also have a higher probability of returning capital. If an investor had a bearish view on the USD, he or she could use similar logic in the reverse manner. An investor bearish on USD and preferring more leverage (substantial move) might purchase OTM puts. A bearish investor who is willing to purchase less leverage (moderate move) might purchase ATM puts. Another choice for bearish investors would be ITM put options, which carry a higher cost. Sellers of options have a different risk and reward perspective. The seller of OTM call options would be selling leverage, hoping that the USD did not rally above the specific strike price sold. The seller of the ATM call options would be selling a bit less leverage, hoping that the USD would not rally above the strike price selected (or at least not above the breakeven point the strike price plus the premium received). The seller of ITM call options would be predicting a USD decline. Remember that the maximum profit for an options seller is the premium received. Sellers of OTM put options would be selling downside leverage, hoping the USD did not fall below the strike price sold. The seller of ATM put options would be selling a bit less leverage, hoping the USD would not fall below the strike price selected (or at least not below the breakeven point the strike price less the premium received). The seller of ITM put options would be selling the least leverage, hoping the USD would rally above the strike price sold, thereby keeping the entire put premium. Sellers receive the options premium but are obligated to sell the USD at the strike price (call), or buy the USD at the strike price (put). While options buyers have limited risks, options sellers have substantial risks. Protecting Yourself From Currency Exposure A very popular options strategy is hedging, whether you re an importer/exporter or a registered investment adviser/investor. Today, many foreign investors in the U.S. are skeptical of the U.S. Federal Reserve s effort to pump so much money into the financial system. They might want to use FX put options (assuming the USD is the base currency in the options convention) to hedge their currency exposure on U.S investments. U.S. investors could have a similar view on the U.S. currency. Alternatively, investors might want to hedge their nonu.s. currency risk by buying call options to hedge against potential U.S. dollar strength. A simple concept for hedging can be applied: Purchasing puts on the base currency pair value hedges weakness in the base currency; purchasing calls on the base currency pair value hedges strength in the base currency. The best way to illustrate the specific costs and calculations of these investments is to use FX options. Using the prices provided to the marketplace on July 16, there were numerous ways that the hedging could have been implemented. For example, if a Canadian investor were considering hedging his or her U.S. currency exposure, he or she might want to look at the ISE FX options symbol CDD. With the referenced exchange rate for USD/CAD (the USD is the base currency in this currency pair value) at , the exchange rate is multiplied by 100 to obtain the pair value of The straightforward formula for determining the number of contracts needed for hedging FX options is the portfolio s size/pair value * 100, or (using a hypothetical USD $1 million portfolio) 1,000,000/11,189. The hedging quantity would be 89.37, or just simply 89 CDD contracts based on the hypothetical $1, million portfolio. Since the hypothetical Canadian investor is pursuing hedging USD weakness, he or she would be considering CDD puts for hedging with limited risk. To reiterate, since the USD/CAD currency pair value has the USD as the base currency, if you had an objective of hedging USD weakness, puts would be implemented. Using CDD fivemonth puts as an example, the 123 put was priced at $11.30, the 118 put was priced at $7.50, the 113 put was priced at $4.45, the 108 put at $2.35 and the 103 put at $1.10. This should be intuitive: The lower the strike put, the cheaper the premium, but with increased foreign exchange risk. Using the fivemonth puts, the net costs (not including commissions) would be as follows: $100,570 (123p), $66,750 (118p), $39,605 (113p), $20,915 (108p) and $9,790 (103p) to hedge a USD $1 million portfolio for five

7 months at the various strike prices. For a U.S. investor with concerns regarding his or her hypothetical Canadian investments, the methodology would be very similar, except the hypothetical American investor would purchase calls to hedge Canadian dollar exposure. Since the hypothetical American investor is pursuing hedging Canadian dollar weakness (hedging the quote currency weakness (USD/CAD) translates to buying calls on the base currency), he or she would be considering CDD calls for hedging with limited risk. Using CDD fivemonth calls as an example, the 103 call was priced at $11.00, the 108 call at $7.30, the 113 call at $4.40, the 118 call at $2.50 and the 123 call at $1.35. Again, this should be intuitive: The higher the strike call, the cheaper the premium, but with increased foreign exchange risk. Using the fivemonth calls, the net cost (not including commissions) would be as follows: $97,900 (103c), $64,970 (108c), $39,160 (113c), $22,250 (118c) and $12,015 (123c) to hedge a CAD $1 million portfolio for five months at the various strike prices (see Figure 5). Another options strategy that could be implemented is simply buying calls or puts to make foreign exchange forecasts with limited risk. If you purchase an option, your worstcase scenario is the debit you paid. A simple way to look at your breakeven at various strike prices is to add the premium to the strike price (calls) or subtract the premium (puts). Using the aforementioned prices, a USD bull could purchase a 113 call for $4.40 with a breakeven at expiration of A USD bear could purchase a 113 put for $4.45 with a breakeven of Obviously, if you are a buyer of options, you are forecasting movement (hopefully in your desired direction). Again, the primary benefit of buying an option is the ability to control the right to buy or sell with limited risk. MultiLegged Options Strategies Multilegged positions called spreads are variations of the singlelegged options strategy. Spreads allow investors to select unique payoffs with limited risk. Investors can target the selling of option premiums using credit spreads or the construction of debit spreads that might help reduce their exposure to time premiums. Investors can choose from numerous strategies, including vertical spreads, straddles, strangles and calendars. Each strategy comes with its own unique advantages and disadvantages. Investors can tailor their own unique risk and reward payoff scenarios. Debit and credit spreads can be used to create limited risk strategies, while still having a market view on the currency pair. Calendar spreads can be implemented if the investor has a view on the certain timing that the currency pair might remain in a range, or break out (a different strike price might be selected), with normally lower reward considerations than straddles or strangles. Straddles and strangles provide much higher risk/reward payoff scenarios. The most important consideration in any option strategy is understanding the best and worstcase scenarios in any strategy that you might be considering. The only limitations are based on investors investment goals and risk tolerance. Options spread strategies are often sought by investors looking for more moderate trading results rather than the much higher potential payoffs of buying singlelegged calls or singlelegged puts. Investors must always consider risk and reward when trading options. If you are looking for greater returns, theoretically, you are taking on more risk. Assuming a bearish USD forecast relative to the CAD when considering vertical spreads, one of the many alternatives was the fivemonth 113/108 CDD debit put spread for $2.10 (CDD priced at ). The limited risk of $2.10 was the maximum loss. The maximum profit for any debit vertical spread is the difference between the two strike prices less any premium paid. Using that methodology, the maximum profit is 52.10, or $2.90 at a price of 108 or below at expiration. Breakeven for the spread would be , or at expiration. Since the options premiums are quoted in USD terms, any profits or losses will also be in USD terms (see Figure 6). Conversely, assuming a bullish USD forecast relative to the CAD when considering vertical spreads, one of the many alternatives was the fivemonth 113/118 debit call spread for $1.80 (CDD priced at ). The limited risk of $1.80 was the maximum loss. The maximum profit for this particular spread is 51.80, or $3.20 at a price 118 or higher at expiration. Breakeven for the spread would be , or at expiration. Remember, spreads can help investors create unique payoffs based on their own financial goals and their own risk tolerances in view of volatility and time premium decay considerations (see Figure 7). Conclusion Employing options to take advantage of currency moves or hedge your exposure does not have to be overly complicated. With global economies becoming much more interdependent, it is only natural that the foreign exchange markets are playing a much bigger and more important role for investors worldwide. The FX options markets allow investors to target various objectives. While investors continue to monitor the S&P 500 as a proxy for the American equity markets, bonds, gold, emerging stocks and the value of the U.S. dollar relative to the other major currencies are also important indicators of how the global markets are performing. With FX options, investors can hedge their foreign exchange risk and implement their views of the foreign exchange market with limited risk. As the marketplace has become more global, investors should not only monitor currency fluctuations, but also all available options that can help diversify their portfolios. FX options are a flexible alternative to trading the currency markets with limited risk. Op i n i o n s a n d e s t i m a t e s c o n t a i n e d in t h i s a r t i c l e a r e s u b j e c t t o c h a n g e w i t h o u t n o t i c e, a s a r e s t a t e m e n t s o f f i n a n c i a l m a r k e t t r e n d s, w h i c h a r e b a s e d o n c u r r e n t m a r k e t c o n d i t i o n s. Th i s a r t i c l e o r i g i n a l l y a p p e a r e d in t h e No v e m b e r/de c e m b e r 2009 issue of Journal of Indexes. All rights reserved. Charter Financial Publishing Network, Inc.

8 ISE IT S A NEW WORLD CURRENCY Australian dollar British pound Canadian dollar Euro Japanese yen Mexican peso New Zealand dollar Swedish krona Swiss franc per US $ USD/AUD USD/GBP USD/CAD USD/EUR USD/JPY USD/MXN USD/NZD USD/SEK USD/CHF SYMBOL AUX BPX CDD EUI YUK PZO NZD SKA SFC in US $ AUD/USD GBP/USD CAD/USD EUR/USD JPY/USD MXN/USD NZD/USD SEK/USD CHF/USD SYMBOL AUM GBP EUU NDO ISE FX Options, the ISE globe logo, International Securities Exchange and ISE are trademarks of the International Securities Exchange, LLC. Options involve risk and 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 of the document may be obtained from your broker or from the International Securities Exchange by calling (212) or by writing the Exchange at 60 Broad Street, New York, NY , International Securities Exchange, LLC. All rights reserved.