A general name for any transaction that does not take place on an exchange. There is no central exchange facility for an over-the-counter market which operates through “middlemen”, or dealers. The dealer stands ready to buy or sell a given security on request. The dealer provides the service of allowing the buyer or seller of an asset to make the exchange when he or she desires, rather than waiting to locate a party who wants to do business. An over-the-counter option is a call or a put whose strike price, expiration, and premium are negotiated between two parties.
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