Exchange-Traded Option

Filed Under »
Dictionary Says

Definition of 'Exchange-Traded Option'

An option traded on a regulated exchange where the terms of each option are standardized by the exchange. The contract is standardized so that underlying asset, quantity, expiration date and strike price are known in advance. Over-the-counter options are not traded on exchanges and allow for the customization of the terms of the option contract.

Exchange-traded options are also known as "listed options".
Investopedia Says

Investopedia explains 'Exchange-Traded Option'

The benefits to exchange-traded options are the liquidity of the options, standardized contracts, quick access to prices and the use of clearing houses by exchanges. The use of clearing houses guarantees the option contract will be fulfilled, while with over-the-counter options the ability to exercise the contract is dependent on the ability of the other party to meet the obligation.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Option

    A financial ...
  2. Exchange

    A marketplace in ...
  3. Underlying

    1. In ...
  4. Over-The-Counter - OTC

    A security ...
  5. Clearing Corporation

    An organization ...
  6. Clearing House

    An agency or ...
  7. Options Clearing Corporation - OCC

    An organization ...
  8. Chicago Board Options Exchange - CBOE

    Founded in 1973, ...
  9. Listed Option

    An option that ...
  10. Allocation Notice

    An official ...

Articles Of Interest

  1. Options Basics: Types Of Options

    Plain vanilla? Exotic? Learn about the different option flavors and how they can be used.
  2. Dividends, Interest Rates And Their Effect On Stock Options

    Learn how analyzing these variables are crucial to knowing when to exercise early.
  3. Can an option have a negative strike price?

  4. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  5. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  6. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  7. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.
  8. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  9. Simplify Your Portfolio

    Faced with an overabundance of choices, many investors forget to stick to the basics.
  10. Hedging With ETFs: A Cost-Effective Alternative

    The benefits of ETFs for hedging are clear and investors of all sizes are taking notice.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center