ABSTRACT
The second distinction is between over-the-counter (OTC) options and exchange-traded options. OTC options are the result of private negotiations between two parties (typically, a bank and a client).They may relate to any amount of any stock at any agreed price and have any expiry date. In other words, they can be tailor-made to the specific requirements of the client buying the option. Exchange-traded options are bought and sold on an organised exchange. They are standardised as to the amount and price of the stock,and the available expiry dates.Contracts would provide a limited range of strike prices and expiry dates. (Strike prices are the prices at which stocks can be bought or sold, and expiry dates are the dates on which the options cease to exist.) There is also a limitation as to which stocks are available.Most exchange-traded options are American-style.
CALL OPTIONS
