Chapter 04 · Section 4.1
Automated Exchanges
Which of the following is generally understood to be an automated option exchange?
a) An exchange on which premiums are determined by computer.
b) An exchange on which bids and asks are entered by the market participants into a computer and visibly displayed.
c) An exchange on which a computer matches buy and sell orders and quotes.
The term automated refers to the trading mechanism: either the matching of buys and sells is done by people in an open outcry system, or by computer.