CDR options vs US options: which should you sell?
A CDR option is small and in Canadian dollars. A US option is big, in US dollars, and usually trades more. Pick the one your account can back without stretching.
The short answer
Sell CDR options when the US stock is too big for your account, or you want to stay in Canadian dollars. Sell US options when you have the US cash and want the most strikes, dates and buyers.
A CDR (Canadian Depositary Receipt) is a Canadian-dollar receipt for a slice of one US share. It trades in Canada. Some CDRs have listed options on the Montreal Exchange. A US option is the normal option on the US stock itself, with 100 shares per contract.
Both carry the same main risk. If the company drops, you lose. The size of the loss just scales with the size of the contract. This comparison is one part of my map of selling options in Canada.
Side by side
| CDR option | US option | |
|---|---|---|
| Trades on | Montreal Exchange | US options exchanges |
| Currency | Canadian dollars | US dollars |
| One contract covers | 100 CDRs, each a slice of a share | 100 shares |
| Cash to back one put | Small | Large on big US names |
| Currency swings | Most CDRs hedge most of it out | Your US cash moves with the dollar |
| Strikes and dates | Fewer | Many, often weekly |
| Gap between bid and ask | Often wider | Often tight on big names |
| Fit in a TFSA or RRSP | Easy: Canadian cash, no conversion | Needs US cash or a conversion |
| Loss if the company drops 25% (example below) | −$370 | −US$7,400 |
How much cash each one ties up
This is the main reason CDR options exist.
A US put (hypothetical). A made-up US stock, XYZ, trades at US$400. You sell one put at a US$380 Strike price for US$6.00. You collect US$600. To back it, you set aside US$38,000.
A CDR put on the same company (hypothetical). Say an XYZ CDR trades at $20. One contract covers 100 CDRs, per the Montreal Exchange's specs. You sell one put at a $19 strike for $0.30. You collect $30. To back it, you set aside $1,900, in Canadian dollars.
Same company. Same idea. One needs a small fraction of the cash, and no currency swap. For a small TFSA, that is often the only way to sell a Cash-secured put on a big US name at all.
When the company drops (an illustration, not a trade idea)
Now XYZ falls 25% before expiry. Both puts are assigned.
| US put | CDR put | |
|---|---|---|
| You buy at the strike | US$380 × 100 = US$38,000 | $19 × 100 = $1,900 |
| Worth at expiry | US$300 × 100 = US$30,000 | $15 × 100 = $1,500 |
| Loss on the shares | −US$8,000 | −$400 |
| Premium kept | +US$600 | +$30 |
| Net | −US$7,400 | −$370 |
Look at the two nets as a share of the cash set aside. Both lose about the same slice. The CDR doesn't make the trade safer. It makes it smaller. That's the real choice: how big a bet your account can carry.
Currency: who takes the swing?
US options. Your premium and your backing cash are in US dollars. If the US dollar falls against the loonie while you hold, those dollars are worth fewer Canadian dollars. If you convert Canadian cash to back a put, you also pay a conversion cost each way, unless you use Norbert's gambit.
CDR options. Most CDRs are built with a currency hedge, so the US dollar mostly doesn't move them. The issuer's page for each CDR says how it's built. You stay in Canadian dollars from start to finish. The hedge has a cost, so a CDR won't track the US stock perfectly over months.
For tax, US-dollar trades must be shown in Canadian dollars. See converting US option premiums to CAD for tax.
Spreads and liquidity
US options on big names are some of the most traded contracts anywhere. The gap between the bid and the ask is often a penny or two.
CDR options trade far less. A wide gap can eat a big share of a small premium. In the example, if the CDR put shows $0.25 bid, $0.35 ask, selling at the bid gets you $25, not $30. That's a sixth of the premium gone before the trade starts.
So on a CDR chain:
- Use a limit order near the middle and wait.
- Check Open interest on your strike. Low numbers mean few buyers.
- Expect fewer strikes. You may not get the exact one you want.
Which fits your account?
- Small account, big US name you'd own? CDR options fit. The cash needed is in reach.
- Large account with US cash already in it? US options give you more strikes, more dates and tighter spreads.
- TFSA or RRSP? Covered calls are widely allowed in both. Cash-secured puts depend on the broker, and options permissions differ by broker. Not every broker offers CDR options either.
- Running the wheel strategy? Both work. Sell the put, take the CDRs or shares if assigned, then sell calls on them.
As of October 2026, the Montreal Exchange keeps the current list of CDRs with options, and each contract's size, on m-x.ca. Check it the day you plan to trade.
Questions
Are CDR options cheaper than US options?
Each contract is smaller, so it costs less cash to back. The premium is smaller too. Per dollar at risk, the trade is roughly the same; the gap between bid and ask is often wider on CDRs.
Do CDR options remove currency risk?
Mostly. Most CDRs have a currency hedge built in, so the US dollar barely moves them. The hedge has a cost, so the CDR drifts a little from the US stock over time.
Can I sell a covered call on a CDR?
Yes, if the CDR has listed options and you own enough CDRs to cover one contract. It works like any covered call: you collect a premium and agree to sell at the strike.
Which has more buyers and sellers?
US options, by a wide margin, on most big names. That's why their spreads are tighter. Check the bid, the ask and the open interest on both chains before you choose.
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