Chapter 01 · Section 1.1

Trading

                       OTC OPTIONS      EXCHANGE-TRADED OPTIONS
 

Contract Terms          negotiated         standard
Delivery                perhaps 50%        less than 10%
Trading                 .........          centralized
Credit Risk             .........          clearing house
Liquidity               .........          generally high
Margin calls            .........          minimum margin regulated

OTC options are traded:

a) by open auction on a centralized trading floor.
• b) through a negotiated arrangement between buyer and writer.
  Yes. OTC options trading works on a bilateral basis. Continue

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