OTC options are non-standardized options contracts traded in non-centralized trading venues. They are financial derivatives that are negotiated by two parties over the counter or matched by intermediaries, and the trading conditions are formulated according to the needs of both parties. Exchange-traded options are exchange-traded options or exchange-listed options, which refer to standardized financial options contract transactions conducted on centralized trading venues. There are four main differences between OTC options and on-exchange options:

1. On-exchange option contracts are standardized, and all contract elements are determined by the exchange, while OTC option contracts are non-standardized, and the elements are determined by participating parties. The two parties shall negotiate privately. The subjects of OTC options contracts are more diverse. As long as both parties to the transaction are willing to reach an agreement, in principle, any subject can be traded.

2. The participants are different. On-exchange options can be traded by individual investors and institutional investors, while OTC options are generally only allowed to be traded by institutional investors.

3. The transaction methods and settlement methods are different. Exchange-traded options are a three-level exchange-member-customer system with central clearing. OTC options are an exchange-customer secondary system with bilateral clearing and cash net settlement.

4. Transaction fees are different. There is a handling fee for on-exchange options, but there is no handling fee for over-the-counter options for the time being.