The PHLX offers cash settled fx options and they're actually starting to build a lot more OI and volume. They are basically options on the cash but like cash settled index options they settle into cash. They sound like they would be what you're looking for.
I was actually about to mention this myself. The FOP's (Futures Options) I've been making reference to have a notional value of 100k-125k currency units. The PHLX options trade on forex mini-lots, or 10k. I have no experience trading them, however, and could definitely not endorse them from a personal standpoint. It's a really new product, so I doubt that you're going to see a lot of liquidity in the early-going.
forget all currency options...why?...no volume on ANY of the currency option products...you will get hit with huge spreads and no liquidity...no volume on any currency options...stick with the emini SP...
Back in the late 80's and early 90's I was the $/Yen options specialist on the PHLX it was a good product then. Even the IMM/CME product was a big volume player then, but they were both killed by the efficiency of the OTC market for the bigger players. I am not a PHLX member anymore and have not traded those products in over 10 years but I know the guys who run the books on the PHLX and they're going after the smaller players who want the cash settled product and whose brokers/clearing firms dont want the hassle of dealing in currency settlements.
options on futures....do tehy offer more leverage compared to your regular stock options? since futures offer more leverage than options....confused also, i hear about this volatility arbitrage, where u basically do a straddle on one of the usdgbp options, and some ppl make a nice profit doing this consistently.