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.
For delivery to take place, an option must be exercised. This is not the case if an option is sold back to the writer.