The Options Clearing Corporation (OCC)

What this video covers

• Why the Options Clearing Corporation (OCC), not the exchange, is both the issuer and guarantor of every listed options contract
• How the OCC interposes itself as central counterparty, becoming the buyer to every seller and the seller to every buyer
• What standardization and fungibility mean for contract terms (underlying, strike, expiration, contract size) and secondary market trading
• The four-step exercise and assignment chain from holder, to broker, to OCC, to member firm, to customer
• Why assignment from the OCC to a member firm is always random, while the firm-to-customer step can be random or first-in, first-out (FIFO), with mandatory advance disclosure
• Why the writer cannot refuse assignment even though the holder controls the exercise decision
• The Options Disclosure Document (ODD) timing rule: delivery at or before account approval, and that a hyperlink satisfies the requirement