Chapter 01 · Section 1.1

Delivery

                       OTC OPTIONS      EXCHANGE-TRADED OPTIONS
 

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

With OTC Options, delivery is:

a) anticipated in perhaps 50% of all transactions.
b) anticipated in only 2-3% of all transactions.
• c) anticipated in nearly 100% of all transactions.
  No. For options, delivery is always subject to exercise, and an option is only exercised if its holder finds it worth doing so.

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