Options are an excellent way for investors and traders to gain exposure to different financial markets while managing their investment risk.
Once a trader buys an options contract, they get the right to buy or sell an underlying asset at a pre-decided price on or before a specific date. These contracts are bought and sold on options exchanges that facilitate their trades.
Options exchanges provide a location and framework that standardizes options trades and contracts so they can be traded fairly. An options exchange can be physical or virtual, with international options exchanges allowing international investors to buy and sell options contracts as they wish.
However, not all options exchanges are made the same. But we have made things easier for you. Here are the best international options exchanges you can consider if you are interested in offshore investing.
The Best International Options Exchanges for Offshore Investors
#1: Montreal Stock Exchange
This derivatives exchange is located in Montreal, Canada. It trades on options and futures contracts whose underlying assets include energy stocks, exchange-traded funds, currencies indices, interest rates, and equities.
Even though it is not as broad as the U.S. options market, the equity options on the Montreal Stock Exchange cover the largest traded firms in Canada. The most interesting options are interest rate derivatives.
These are options that cover the short-term rates accepted by the bankers on two and 10-year bonds released by the Canadian government and the overnight rate until the three-month rate of the same bonds.
#2: Chicago Board Options Exchange (CBOE)
This is the biggest options trading platform globally and it was established in 1973. It is located in Chicago in the United States and focuses on options contracts for interest rates, individual equities, and the S&P 500 index.
Being the largest options exchange in the world, it also has the largest volume of options traded daily. This options exchange uses a hybrid system that uses electronic trading and the open outcry method.
Electronic trading constitutes a significant portion of the exchange business done on the platform. And the outcry method entails people using hand signals and shouting to tell others about buy and sell orders.
The Chicago Board Options Exchange is also known for allowing traders to test their trades before executing them. By that, new traders will have a good understanding of how the exchange works and test their strategies.
If you are a trader looking to test the waters of options selling after learning a lot about it through options handbooks or through an expert, then this stock exchange is perfect for you.
#3: Eurex Exchange
The Eurex Exchange is another options exchange you can trust as an offshore investor. It is a leading exchange for trading European-based derivatives, including European futures and options. Located in Eschborn in Germany, it focuses on European stocks, German and Swiss debt instruments, and European indexes.
All trades executed through the exchange are usually first cleared by Eurex clearing. That is a designated Central Counterparty for numerous asset classes and derivatives traded on the Eurex exchange.
Even though the Eurex exchange executes most of its trades using an electronic system, it still uses an outcry option that was the preferred trading option in the 90s.
#4: International Securities Exchange (ISE)
The International Securities Exchange is a public-traded and wholly owned subsidiary of NASDAQ, Inc., an American financial services corporation. It was launched as the premier electronic exchange in the United States and has become a unique provider of screen-based trading.
A screen-based trading system has an edge over others in the market as it allows traders to always see security prices. It also ensures that prices can be fixed efficiently due to the amount of information passing through the system.
ISE also offers foreign exchange options based on numerous foreign currency pairs, proprietary index products, index options, and equity options. This exchange also provides traders and investors with numerous tools and information that help them assess market sentiment, volatility, and other market data that could help them make better investment decisions.
#5: Borsa Istanbul Derivatives Market (VIOP)
The VIOP was established in 2003, with its headquarters located in Istanbul, Turkey. Presently, Borsa Istanbul Derivatives remains the only options exchange in Turkey, and it is regulated by the Capital Markets Board of Turkey.
The exchange offers options based on numerous underlying assets, including commodities, equities, and indexes. VIOP also provides traders on its platform different leverages to help them gain larger market positions using little capital, risk management tools, and opportunities to minimize losses.
#6: Taiwan Futures Exchange (TAIFEX)
The Taiwan Futures Exchange is based in Taipei, Taiwan, and was established in 1971. It allows traders to buy and sell futures and options contracts and is the only derivatives exchange in the country. It also has a large spread of underlying commodities, although they are limited compared to those provided by other larger exchanges in Europe and America.
Everyone seeking offshore investment opportunities should consider investing in options through international options exchanges. These exchanges expose traders to new markets while helping them minimize risk by spreading it in different markets.
We have mentioned a few of them in this post already. Check them out and choose one that best aligns with your needs and portfolio.