Over-the-Counter (OTC)

Securities traded directly between counterparties

What is Over-the-Counter (OTC)?

Over-the-Counter (OTC) Securities traded directly between parties rather than on a public exchange. OTC options can have customized terms (any strike, expiration, or size) but lack the transparency, standardization, and central clearing of exchange-traded options. OTC options carry counterparty risk and are primarily used by institutions.

Complete Definition

Securities traded directly between parties rather than on a public exchange. OTC options can have customized terms (any strike, expiration, or size) but lack the transparency, standardization, and central clearing of exchange-traded options. OTC options carry counterparty risk and are primarily used by institutions.