Why Are Non-Standardized Options Typically Traded via RFQ Rather than a CLOB? ⎊ Path

Why Are Non-Standardized Options Typically Traded via RFQ Rather than a CLOB?

Non-standardized, or bespoke, options (like exotic or customized strike/expiry options) lack the uniformity required for mass market trading on a CLOB. Their unique terms make it impossible to create a liquid order book.

The RFQ process allows the buy-side to specify the exact terms and solicit tailored quotes from market makers willing to price and assume the specific risk. This negotiation is essential for illiquid or complex instruments.

How Does ‘Market Impact’ Affect the Choice between RFQ and CLOB for a Large Options Order?

Why Are Illiquid Crypto Options Often Traded on RFQ Platforms Instead of CLOBs?

Why Are Standardized Options Contracts More Liquid than Customized OTC Options?

How Does the ‘Greeks’ Calculation Become More Complex for Exotic Options?

What Is the Main Characteristic of an Over-The-Counter (OTC) Derivatives Market?

Define ‘Market Impact’ and Explain Why It Is Lower in RFQ than in a Large CLOB Trade

What Mechanisms Are Used to Trade Forward Contracts If They Are Not on an Exchange?

How Does a Request for Quote (RFQ) System Differ from an Order Book Exchange in Derivatives?

Glossar

Non-Standardized Options

Framework ⎊ Non-Standardized Options within cryptocurrency derivatives represent bespoke contracts deviating from exchange-traded specifications, frequently tailored to idiosyncratic risk profiles or market views.