The most common way to trade options is via standardized options contracts that are listed by various futures and options exchanges.  Listings and prices are tracked and can be looked up by ticker symbol. By publishing continuous, live markets for option prices, an exchange enables independent parties to engage in price discovery and execute transactions. As an intermediary to both sides of the transaction, the benefits the exchange provides to the transaction include:
- fulfillment of the contract is backed by the credit of the exchange, which typically has the highest rating (AAA),
- counterparties remain anonymous,
- enforcement of market regulation to ensure fairness and transparency, and
- maintenance of orderly markets, especially during fast trading conditions.
Over-the-counter options contracts are not traded on exchanges, but instead between two independent parties. Ordinarily, at least one of the counterparties is a well-capitalized institution. By avoiding an exchange, users of OTC options can narrowly tailor the terms of the option contract to suit individual business requirements. In addition, OTC option transactions generally do not need to be advertised to the market and face little or no regulatory requirements. However, OTC counterparties must establish credit lines with each other, and conform to each others clearing and settlement procedures.