Are OTC Options the Right Investment for You?

OTC options essentially stand for “over-the-counter” options, which are non-exchange listed options. That means the counter-parties (buyers and sellers) will trade options privately.  

OTC options offer value in regards to privacy, tailoring specific needs between counter-parties, and mitigating costs of trading. In essence, there are lower transaction costs by trading outside of a commercial exchange.

In general, options are a fantastic way to garner high investment returns while working with very little monetarily in comparison to stocks and bonds. Options also carry a very high amount of risk and indirectly have been the cause of systemic financial failure. Thus, you need to treat them with utmost consideration and caution before deciding to invest.

You must first consider the following as you decide whether OTC options are right for you:

Do you work with premier bankers?

Good bankers can make markets work for you and offer greater service based on expertise and connections with other counter-parties.

What is your discretion for level of privacy?

If you do not have specific institutional marketing needs, exchange listed options offer the same benefits, however, without the privacy. If privacy is not an issue, then exchange traded options can be a simpler route.

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