What Is a ‘Central Limit Order Book’ (CLOB) and Its Role in Options Trading?

A CLOB is a transparent, electronic system used by exchanges to match buy and sell orders for a specific financial instrument, like options. It aggregates all limit orders, displaying the best bid and ask prices.

Its role is to ensure fair and efficient price discovery and execution by prioritizing orders based on price and time. This centralized structure is fundamental to traditional options markets.