OTC Options

What are 'OTC Options'

OTC options are exotic options traded on the over-the-counter market, where participants can choose the characteristics of the options traded.

BREAKING DOWN 'OTC Options'

The flexibility of these options is attractive to many. With OTC options, both hedgers and speculators can benefit from avoiding the restrictions that normal standardized exchanges place on options. The flexibility allows participants to achieve their desired position more precisely and cost effectively.

RELATED TERMS
  1. Exotic Option

    An option that differs from common American or European options ...
  2. Exchange-Traded Option

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  3. Lookback Option

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  4. Vanilla Option

    A financial instrument that gives the holder the right, but not ...
  5. Flexible Exchange Option - FLEX

    A non-standard option which can be customized, allowing both ...
  6. Listed Option

    An option that is sold on a registered exchange, such as the ...
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RELATED FAQS
  1. What's the difference between a regular option and an exotic option?

    Before learning about exotic options, you should have a fairly good understanding of regular options. Both types of options ... Read Answer >>
  2. Does the seller (the writer) of an option determine the details of the option contract?

    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Answer >>
  3. Are there any risks involved in trading put options through a traditional broker?

    Explore put option trading and different put option strategies. Learn the difference between traditional, online and direct ... Read Answer >>
  4. Do you have to be an expert investor to trade put options?

    Learn about investing in put options and the associated risks. Explore how options can provide risk, which is precisely defined ... Read Answer >>
  5. Do options make more sense during bull or bear markets?

    Understand how options may be used in both bullish and bearish markets, and learn the basics of options pricing and certain ... Read Answer >>
  6. How can I find out which stocks also trade as options?

    The trading of options has become increasingly popular among retail investors as they become aware of the many different ... Read Answer >>
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