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I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked a desk to quote me a $1 strike 5-years-to-expiry call on Amazon, would they price this like pure delta? If there's a premium, what's driving that? What if I told the desk that I was committed to buying the option; would they still put a premium on the call?

For a more complex example, if I asked a desk to quote me a $1 strike perpetual call option on Amazon that can't be exercised for the next 5 years, would they price this like pure delta? If there's a premium, what's driving that? What if I told the desk that I was committed to buying the perpetual; would they still put a premium on the call?

I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked a desk to quote me a $1 strike 5-years-to-expiry call on Amazon, would they price this like pure delta? If there's a premium, what's driving that? What if I told the desk that I was committed to buying the option; would they still put a premium on the call?

For a more complex example, if I asked a desk to quote me a $1 strike perpetual call option on Amazon that can't be exercised for the next 5 years, would they price this like pure delta? If there's a premium, what's driving that (illiquidity of the exotic? adverse selection?) What if I told the desk that I was committed to buying the perpetual; would they still put a premium on the call?

I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked a desk to quote me a $1 strike 5-years-to-expiry call on Amazon, would they price this like pure delta? What if I told the desk that I was committed to buying the option; would they still put a premium on the option?

I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked a desk to quote me a $1 strike 5-years-to-expiry call on Amazon, would they price this like pure delta? If there's a premium, what's driving that? What if I told the desk that I was committed to buying the option; would they still put a premium on the call?

For a more complex example, if I asked a desk to quote me a $1 strike perpetual call option on Amazon that can't be exercised for the next 5 years, would they price this like pure delta? If there's a premium, what's driving that? What if I told the desk that I was committed to buying the perpetual; would they still put a premium on the call?

I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked an exo desk to quote me a $1 strike call on Amazon, would they price this like pure delta? What if I told the desk that I was committed to buying the option; would they still put a premium on the option?

I'm curious about the typical markup on quoted exotic options as well as what drives this premium.

You call up an options desk for a quote, and they'll give you a spread that reflects their market on the vol plus a bunch of other things. (This spread might be deflected based on inventory, but let's ignore this aspect for a second.) Generally, what goes into the spread apart from the uncertainty about the forward vol? Is anything other than adverse selection priced in on top of the vol spread?

For a more concrete example, if I asked a desk to quote me a $1 strike 5-years-to-expiry call on Amazon, would they price this like pure delta? What if I told the desk that I was committed to buying the option; would they still put a premium on the option?