Options Clearing Corporation (OCC)

The Options Clearing Corporation (OCC) is a vital financial organization that acts as a central counterparty for options and derivatives traded on exchanges. It guarantees the performance of options contracts, ensuring that buyers and sellers fulfill their obligations, which reduces the risk of default. The OCC also manages the process of clearing trades, collecting margins (collateral), and maintaining fair markets. Essentially, it provides stability and confidence in the options market by ensuring that trades are executed smoothly and securely, serving as the backbone for options trading in the U.S. financial system.