1. Different liquidity risks:

The liquidity risk of OTC options is relatively large, the number of participants is not as sufficient as that of on-market options, and the risk can be transferred out at any time. There are not so many counterparties for OTC options, so the liquidity risk is relatively high. In terms of credit risk, OTC options trading involves both parties signing an option agreement, and the performance of the option expiration contract depends on the credit of both parties. If the counterparty has poor credit, there may be a risk of default. OTC and on-exchange options generally do not involve credit risk.

Liquidity and credit risk are different; the risk value of on-exchange options is low, while OTC options are one with greater liquidity risk.

2. Different contracts:

On-exchange options are very standardized contracts, while OTC options have no unified standards.

3. Different forms:

One of the biggest hot spots of OTC options is their diverse varieties and flexible forms; in contrast, the trading varieties of on-exchange options are relatively single and optional. Also less.

Baidu Encyclopedia - Individual Stock Options

Baidu Encyclopedia - Exchange Options