Chapter 01 · Section 1.1

OTC Options Versus Exchange -Traded Options

We have learned about the difference between forwards and futures.

                   Forwards             Futures

Contract Terms     variable             standard
Delivery           expected             only 2-5%
Trading            via phone            centralised
Margins            negotiated           uniform
Credit Risk        taken by             clearing
                          counterparty         house
Liquidity          lesser               greater
Cash Flow          on delivery          daily
                                               settlement