Why Do Institutional Traders Prefer the Customization Offered by OTC Markets? ⎊ Path

Why Do Institutional Traders Prefer the Customization Offered by OTC Markets?

Institutional traders prefer customization because they often need to execute complex hedging strategies that require non-standard strike prices, expiration dates, or unique underlying assets that are not available on centralized exchanges. OTC allows them to tailor a contract precisely to their specific risk exposure or investment thesis.

Why Might an Institutional Investor Prefer a Customized OTC Crypto Option?

What Are ‘Exotic Options’ and Why Do They Require More Complex Dynamic Hedging Strategies?

Can Options and Derivatives Be Traded via OTC Desks More Easily than on Exchanges?

What Is the Trade-off between Standardization and Contract Customization in Derivatives?

Contrast Standardization with the Customization Found in Forward Contracts

Does the Requirement for Actual Asset Holding Reduce Speculative Trading Volume?

What Is a Common Example of an OTC Derivative in the Crypto Space?

Why Do Institutions Prefer OTC Derivatives over Exchange-Traded for Large Crypto Trades?

Glossar

Customization

Adaptation ⎊ Customization within cryptocurrency, options, and derivatives signifies the tailoring of financial instruments and strategies to specific risk tolerances, market views, and portfolio objectives.

Institutional Traders

Capital ⎊ Institutional traders, within cryptocurrency derivatives and options markets, represent a significant source of liquidity and price discovery, often deploying substantial capital across diverse strategies.