BROWSE

Dealer Option

What is 'Dealer Option'

An option issued on the physical inventory of a commodity. A dealer option is typically issued by companies that buy, sell or otherwise use a commodity in conducting business. This type of option is not traded on an exchange, meaning that it is traded as an over-the-counter security, and thus are less subject to scrutiny and regulation.

Explaining 'Dealer Option'

These options are typically written by firms such as clearing houses, which hold the physical commodities and offer them to the public on the over-the-counter market. While dealer options exist outside of traditional trading markets, their sale is still heavily scrutinized because they represent a contract between parties.


Further Reading


On dealer markets under competition
www.jstor.org [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Demand-based option pricingDemand-based option pricing
academic.oup.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Do competing specialists and preferencing dealers affect market quality?Do competing specialists and preferencing dealers affect market quality?
academic.oup.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

The economic determinants of interest rate option smilesThe economic determinants of interest rate option smiles
www.sciencedirect.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

The failure mechanics of dealer banksThe failure mechanics of dealer banks
www.aeaweb.org [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Stock market quality in the presence of a traded optionStock market quality in the presence of a traded option
www.jstor.org [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Trades outside the quotes: Reporting delay, trading option, or trade size?Trades outside the quotes: Reporting delay, trading option, or trade size?
www.sciencedirect.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Informed trading and option spreadsInformed trading and option spreads
papers.ssrn.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Does variance risk have two prices? Evidence from the equity and option marketsDoes variance risk have two prices? Evidence from the equity and option markets
www.sciencedirect.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …

Using option prices to estimate realignment probabilities in the European Monetary System: The case of sterling-markUsing option prices to estimate realignment probabilities in the European Monetary System: The case of sterling-mark
www.sciencedirect.com [PDF]
… will be traded in a way that keeps inventories of different dealers from diverging … Amihud, Y. and Mendelson, H., 1979, "Dealership Market: Market Making with Inventory." Working … W., 1979, "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and …


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