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
b) standard.
c) variable, depending upon whether the option is purchased or written.