Why is the "Encrypted" format not available in the list when erasing a USB flash chip in Disk Utility?
You can't do it from Disk Utility but you can do it from Finder by right-clicking on the partition and choosing Encrypt.


Open Disk Utility and click on the drive (not the partition)
Click Erase button
Choose Name
Choose Format: OS X Extended (Journaled)
Choose Scheme: GUID Partition Map
Click Erase button
When complete, open Finder
Right-click on the new drive partition
Select Encrypt
Enter passwords
Finish