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CDR options explained, for option sellers

A CDR option is a call or put on a Canadian Depositary Receipt, a Canadian-dollar slice of a US stock. It lets you sell options on a big US name with less cash and no currency swap.

Options guide · 8-minute read · Updated 2026-10-28

The short answer

A CDR option is a listed call or put whose underlying is a CDR, not the US stock itself. It trades on the Montreal Exchange, in Canadian dollars. You can sell a Covered call on CDRs you own, or a Cash-secured put backed by Canadian cash, the same way you would on a Canadian stock.

Two things make it different from a US option on the same company:

1. It's smaller. A CDR is a fraction of one share. So one contract controls less of the company and needs far less cash.
2. It's in Canadian dollars. No converting to US dollars to back a put.

This page is part of my map of selling options in Canada.

What a CDR is, in plain words

A Canadian Depositary Receipt is a receipt that stands for part of a share of a big US company. A Canadian bank holds the real shares. You buy the receipts on a Canadian exchange, in Canadian dollars.

Three things to know:

• Each CDR is a fraction of a share. The fraction is set so the CDR trades at a low price per unit. It's different for each company.
• The currency swing is mostly taken out. CDRs are built with a currency hedge, so a move in the US dollar mostly doesn't move your CDR. The hedge isn't free. Over time a CDR won't track the stock perfectly.
• The ratio can change. If the issuer changes how much of a share each CDR stands for, the CDR's price changes too. Listed options may be adjusted when that happens, the way they can be after a stock split. The exchange posts a notice when it does.

Not every CDR has listed options. The Montreal Exchange keeps the current list on m-x.ca. Check it there, as of the day you plan to trade.

How the contract size works

As of October 2026, one CDR option contract covers 100 CDRs, not 100 shares. The Montreal Exchange started listing CDR options on March 3, 2025. They're American style, so they can be exercised any day before expiry, and they settle in CDRs. Check the contract specs on m-x.ca for each class before you trade.

That's where the capital difference comes from. Here's how it plays out with made-up numbers.

A US put (hypothetical). A made-up US stock, XYZ, trades at US$500. A put at a US$480 strike must be backed by US$48,000 in cash. Most Canadian accounts would have to convert first.

A CDR put (hypothetical). Say an XYZ CDR trades at $25. A put at a $24 strike on 100 CDRs is backed by $2,400, in Canadian dollars.

Same company, a far smaller promise. For a TFSA with a few thousand dollars in it, that can be the difference between "can't sell a put on this name" and "can."

A worked example (an illustration, not a trade idea)

You own 100 XYZ CDRs, bought at $25. That's $2,500, in your TFSA.

You sell one call on them with a $27 strike, about 30 days out, for $0.40. You collect $40.

It's a normal covered call, just smaller. The premium is a thin cushion. If the US company drops hard, the CDR drops with it, and −$660 is a real loss.

The wheel strategy works the same way on CDRs. Sell the put. If assigned, own the CDRs. Then sell calls on them.

What you give up

CDR options solve a capital problem. They bring new ones.

• Fewer trades happen. US options on big names are some of the most traded in the world. CDR options trade far less. Expect wider gaps between the bid and the ask. Use limit orders.
• Fewer strikes and dates. A US chain might offer weekly expiries and strikes every dollar. A CDR chain often has fewer. You may not get the exact strike you want.
• The hedge drifts. Your CDR won't match the stock exactly over months. A covered call caps your gain at the strike, but the CDR's starting point already differs a bit from the stock.
• One more layer. You own a receipt from a bank, not the share. Read the issuer's page so you know how dividends and ratio changes are handled.

For a side-by-side, see CDR options vs US options.

CDR options in a TFSA or RRSP

Because CDRs and their options trade in Canadian dollars on a Canadian exchange, they fit registered accounts easily. You don't need US cash in the account, and there's no conversion fee on each trade.

Covered calls are widely allowed in a TFSA or RRSP. Cash-secured puts depend on the broker, and options permissions differ by broker. Check whether yours offers CDR options at all.

Before you sell your first CDR option

1. Check that the CDR has listed options on m-x.ca.
2. Look up how much of a share one CDR stands for.
3. Open the chain. Look at the bid, the ask and the Open interest on the strike you want. If the gap is wide, you give up part of the premium just to get filled.
4. Work out the full outcome table, with the CDR down 30%.
5. Note the company's earnings date. A CDR moves when the US stock moves.

Questions