If an options contract is an agreement between two parties, what happens if the other side of the contract fails to honor their obligation. After all, bad things sometimes happen and, if an investor opens an options contract, the other side of the trade is sometimes another investor, a brokerage firm, or a market maker. Any of these peope or firms can run into financial problems and, if they are holding the other side of your contract, what are the risks to you, the individual options trader?

Founded in 1973, the Options Clearing Corporation is the world’s largest clearing firm and handles all clearing of listed options on stocks, indexes, exchange-traded funds, foreign currencies, single stock futures, and interest rate products. In this function, the OCC serves as guarantor of options contracts. Therefore, if an investor opens an options contract and the party taking the other side goes belly-up, the OCC ensures the contract is honored.

While the OCC’s primary responsibility is to clear options trades, the Corporation’s web site (optionsclearing.com) also includes a variety of useful information and resources for the options traders. Informational memos alert investors to contract adjustments and modifications. Volume statistics break down volume by day and include a historical put-to-call ratio for all trading on the US exchanges. The OCC web site also offers links to educational articles, news, and a directory of listed products.