New from the CBOE
With domestic uncertainty and questionable corporate tactics dominating the headlines, it stands to reason that your customers might be wary of certain U.S. investments right now. Addressing this concern, on September 25, CBOE launched EFA Options, options on the MSCI EAFE exchange-traded fund. EAFE (Europe, Australasia and the Far East) is the pre-eminent benchmark for international performance in the U.S., and over $3 trillion in global assets are benchmarked to MSCI indexes.

For your customers, this gives them potential exposure to a segment of the international investing arena that would otherwise be difficult to access for individual investors. Institutional investors have been using the MSCI EAFE index since 1972 as a measurement of international performance, and now your customers have the opportunity to participate in the movement of this highly regarded index.

For the broker, it means that you have another resource to offer your clients to strengthen their portfolios. Backed by the research and expertise of CBOE, EFA Options are a simple way to gain international portfolio exposure.

EFA Basics
The underlying security for EFA Options is 100 shares of the iShares MSCI EAFE Index Fund (ticker EFA), an exchange-traded fund that has grown to more than $3.8 billion in net assets, and seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the MSCI EAFE Index.

With new EFA Options, your customers now have a highly versatile tool for trading this premier index. Bullish, bearish and neutral investors can all use EFA Options to reflect their opinions on the global market. Investors can trade these options for potential profit or protection, with opportunities to adjust for up, down or unchanging markets. Investors of any market opinion can trade EFA Options to reflect their opinions on the global market.

Characteristics of EFA Options
Simplicity: Your clients will be able to trade a broad market by making one EFA trading decision rather than making the many decisions involved with investing in hundreds of overseas stocks.

Insurance: Certain EFA Options strategies offer your clients a convenient and easy way to reduce the risk of a broad market portfolio, without disrupting the structure of the portfolio.

Predetermined Risk: EFA Options purchasers' risk is only the premium they pay for the option. Therefore, the risk is both known and limited.

Leverage: Purchasing EFA Options, rather than buying or selling the 1,017 individual stocks that comprise the index, provides your clients with additional opportunities to use their investment capital elsewhere. For a relatively small percentage gain in the underlying index, EFA Options can increase in value by a multiple of that gain, assuming the correct option series was selected.

Transaction Costs and Taxes: Your clients may find that EFA Options are more cost and tax-efficient when compared to the process of trading hundreds of overseas stocks.

EFA Options are American-style exercise and physical delivery.

For more information on CBOE's EFA Options, click here.

MSCI EAFE Country Weights Chart

MSCI EAFE INDEX

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 this document are available from your broker or The Options Clearing Corporation, 400 S. LaSalle Street, Chicago, IL 60605. CBOE and Chicago Board Options Exchange are registered trademarks of the Chicago Board Options Exchange, Incorporated. 2002 Chicago Board Options Exchange, Incorporated, All Rights Reserved.