OTC options are different from general on-site options, not their own hands-on transactions, OTC options are investors through the way of inquiry to determine the exercise price of the ** subject to be traded, through offline entrustment of the way to buy and sell, the opening and exercise are through oral entrustment, by the brokerage operation to achieve.
An over-the-counter option is a derivative that is traded over the counter of a broker other than an exchange. Its underlying assets are specific to the management of the company's OTC options business on the A** market. Options are usually traded for 2 weeks, 1 month, 2 months, 3 months, 6 months, 12 months, and 24 months.
*: Option sauce collation release.
In OTC options trading, the buyer obtains the right to buy or sell a specific amount of an agreed amount at an agreed amount within an agreed period of time by paying a certain option fee (i.e., a premium) to the seller. This premium is usually between 3% and 10% of the notional principal. One of the characteristics of OTC options is high leverage, which allows investors to control a larger amount by paying only a portion of the premium, thus increasing the return on investment.
Participating in OTC options trading usually requires the help of institutional access to partner with ** companies. These institutions lend individuals the right to purchase OTC** options, and the individuals pay a certain channel fee to the institutions.
The process is as follows:
Sign the entrustment agreement: The individual signs an entrustment agreement with the institution, and the entrusting institution trades on the OTC options platform on behalf of the institution. A breakdown of the channel fee is included in the agreement.
Inquiry: When an individual is optimistic about a certain **future**, he asks the institution for a quote. Institutions will contact their contracted brokers for inquiry.
Payment: When an individual places an order for a transaction, he or she needs to make a payment to the institution's corporate account.
Transaction confirmation: After the transaction is completed, the institution will send a transaction confirmation letter to the individual.
Things to look out for:
Almost all margin trading targets have over-the-counter options, with the exception of registration-based options.
OTC options are only available on a daily basis and may vary with market volatility.
With the semi-fixed pricing and hedging model of options trading, many dealers have thrown themselves into this space. However, in addition to technical strength, the dealer's credit rating and performance ability have also become important factors in running the business. With the permission of the regulator, 15 ** companies have obtained ** OTC options trading qualifications.
When purchasing ** OTC options, there may be differences in the pricing of services and premiums between different brokers. As a result, buyers often make inquiries and price comparisons to find the best trading opportunities. Although there are a large number of brokers, the pricing of each broker is different, and we will provide a quick price comparison for investors to choose from.