Chapter 01 · Section 1.1

Contract Terms

                       OTC OPTIONS      EXCHANGE-TRADED OPTIONS
 

Contract Terms          .........          standard
Delivery                .........          less than 10%
Trading                 .........          centralized
Credit Risk             .........          clearing house
Liquidity               .........          generally high
Margin calls            .........          minimum margin regulated

With OTC options, contract terms are:

a) set by the exchange and therefore standardized.
• b) negotiated by the parties to the contract.
  Yes. The one-on-one nature of OTC contracts permits the parties to negotiate the exercise price, expiration date, size of contract, place of delivery etc. Continue
  c) determined by the broker.

(Click here for help)