Chapter 01 · Section 1.1

Margin Calls

                       OTC OPTIONS      EXCHANGE-TRADED OPTIONS
 

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

With OTC options, margins are:

• a) negotiated by the parties
  Yes. As with most details of an OTC options contract, margin calls are negotiated by the contracting parties. Continue
  b) standard.
  c) variable, depending upon whether the option is purchased or written.

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