Exchange-Traded Option

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Exchange-Traded Option

An option contract that is traded on an exchange. An exchange-traded option is subject to all of the exchange's applicable regulations; this reduces uncertainly for the investor because exchange-traded options are standardized contracts. They contrast with over-the-counter options, the provisions of which may be customized.
References in periodicals archive ?
Mr Manley's conduct led to trading in Exchange Traded Options on two clients' accounts without their instructions.
It adds futures and exchange traded options to GAIN Capital's core forex trading suite.
Hence, the credit risk of exchange traded options is also low.
There are both over the counter (OTCs) and exchange traded options (ETOs).
If it is an exchange traded option, the amounts (which vary with each different exchange) and the strike dates (deliver dates) are standard--around the 15th of the month in March, June, September, December.
Over the counter options can be tailored to the individual needs of the corporate clien;or example, as discussed above, exchange traded options on the Philadelphia Stock Exchange are for a specific amount, specific maturity and specific strike price interval.
Finally, over the counter options have the advantage of trading twenty four hours a day, unlike exchange traded options which trade only during certain hours.
Both OTC as well as exchange traded options may be introduced.