STSM112110 | Derivatives: introduction to options: trading of options

The majority of equity related options take the form of traded options that are written, issued and traded on investment exchanges (STSM120000) that allow members to trade in a wide range of financial derivatives including equity options.

An option which is traded off-exchange (as opposed to a listed share option traded on-exchange) is known as an Over-The-Counter (OTC) option.

OTC equity option contracts are generally not traded on an investment exchange, but undertaken privately between two separate and independent parties. Any exercise and subsequent settlement of the option will take place outside of the exchange system.

See STSM112050 for the meaning of option exercise

See STSM112100 for further information on Over The Counter options