TSX or US options on an interlisted stock?
Sell on the side where your shares or cash already sit. Then pick the chain with the tighter spread. Neither choice protects you when the stock falls, and the example shows that loss.
The short answer
Many big Canadian companies trade in two places: on the TSX in Canadian dollars, and on a US exchange in US dollars. Think of the big banks, the railways and the large energy names. Each listing has its own option chain.
Sell on the leg your shares or cash are already on. If you own the shares on the TSX, sell the call on the Montreal Exchange chain. If you hold US cash, the US chain can make sense for a put. Then compare the gap between the bid and the ask on that strike.
The choice saves you some dollars on each trade. It does nothing about the big risk. If the company drops, both legs drop together. This page is part of my map of selling options in Canada.
Side by side
| TSX leg (Montreal Exchange options) | US leg (US options) | |
|---|---|---|
| Currency | Canadian dollars | US dollars |
| One contract covers | 100 shares | 100 shares |
| Strikes and dates | Fewer on most names | More, often weekly |
| Gap between bid and ask | Often wider | Often tighter on the biggest names |
| Covers a call on TSX shares? | Yes | Usually not; ask your broker |
| Fit in a TFSA or RRSP | Easy: Canadian cash | Needs US cash or a conversion |
| Dividend | Same company, same dividend | Same company, paid out in US dollars |
| Stock falls 15% (example below) | −$1,420 | −$1,401 |
It's the same company and the same 100 shares. So the two share prices move together once you allow for the exchange rate. If one gets out of line, traders close the gap within seconds.
Your shares decide which chain covers you
Most brokers treat the two listings as separate holdings. Shares you bought on the TSX are not the same line as shares on the US exchange.
So a call sold on the US chain is usually not covered by TSX shares. Your broker may see it as a naked call, which needs margin approval, or block it. Some brokers can move ("journal") shares from one listing to the other. That's the same trick behind Norbert's gambit. Ask yours how it handles it.
For a Cash-secured put, it's about the cash. A put on the TSX chain is backed by Canadian dollars. A put on the US chain needs US dollars in the account.
What the spread costs you (an illustration, not a trade idea)
A made-up interlisted company, XYZ, trades at $100 on the TSX and US$72 in New York. Assume a made-up exchange rate of 1.39, so the two match.
You look at the same 30-day $105 call (about US$75.50 on the US side).
| TSX chain | US chain | |
|---|---|---|
| Bid / ask | $0.80 / $1.20 | US$0.70 / US$0.74 |
| Middle | $1.00 | US$0.72 (about $1.00) |
| Sold at the bid | $80 | US$70 (about $97) |
| Given up to the spread | −$20 | −$3 |
On the TSX chain, selling at the bid hands a fifth of the premium to the spread. A patient limit order near the middle may get filled, or may not. On the US chain, the gap is a few cents. But you'd pay a currency conversion, and the call isn't covered by TSX shares.
Sell one call a month for a year, always at the bid, and the TSX spread costs about −$240 in total. That's real money. Now look at the next section.
When the stock falls, the leg barely matters
Say you own 100 XYZ shares at $100 in Canadian dollars. You sell the $105 call, and the stock then falls 15% to $85 before expiry.
| Sold on the TSX chain at the bid | Same call on the US side, filled near the middle (if your broker lets the shares cover it) | |
|---|---|---|
| Shares: $100 → $85 | −$1,500 | −$1,500 |
| Premium kept | +$80 | +$99 (after a made-up $1 conversion cost) |
| Net | −$1,420 | −$1,401 |
A $19 difference on a $1,400 loss. The premium was a thin cushion either way. Picking the right chain is housekeeping. Picking a stock you'd hold through a 15% drop is the real decision.
That's why the wheel strategy starts with a company you'd own, not with the chain that pays the most.
Dividends and currency
Dividends. It's the same Canadian company either way, and it pays the same dividend per share. On the US leg, your broker pays it out in US dollars. The ex-dividend date usually lines up on both listings. A call that's in the money just before that date can be assigned early on either chain.
Currency. The share price itself doesn't really carry currency risk in Canadian-dollar terms, because the two prices stay matched. Cash does. If you hold US dollars to back a put, and the US dollar falls against the loonie, that cash is worth less in Canadian dollars. For tax, every US-dollar trade gets converted to Canadian dollars anyway. See converting US option premiums to CAD for tax.
How to choose, step by step
- Check where your shares or cash sit. Start with that leg's chain.
- Pull up the same strike and date on both chains.
- Compare the bid, the ask and the Open interest.
- If the TSX spread is wide, try a limit order near the middle and give it time.
- Only use the US chain for a call if your broker confirms the shares cover it.
- In a TFSA or RRSP, covered calls are widely allowed; cash-secured puts depend on the broker, and options permissions differ by broker.
Not sure which Canadian names have options at all? See Canadian stocks with listed options.
Questions
Can I sell a US covered call on shares I bought on the TSX?
Usually not as a covered call. Most brokers treat the two listings as separate holdings. Some can move your shares to the US line first. Ask your broker before you sell.
Which chain has tighter spreads?
On the biggest interlisted names, the US chain usually does. On smaller names it varies. Compare both on the same strike and date, on the day you trade.
Do I get the same dividend on the US listing?
Yes. It's the same company and the same dividend per share. On the US leg it's paid in US dollars, so its Canadian-dollar value depends on the exchange rate that day.
Is one leg safer than the other?
No. Both legs are the same shares. If the company drops 15%, both drop about 15%. The leg only changes your spread, your currency and your account fit.
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