Let's say I am running a fund and I want to place some bets on the market (i.e. speculate) or hedge my current positions.
Starting from this, what would be my incentives to go for exchange-traded products instead of OTC products, and vice-versa?
Of course exchange-traded products would not be ideal if I am into exotic derivatives. But assuming that I just want to buy/sell a given vanilla options, which is available on both types of market, does it make more sense to go OTC or exchange-traded?
My intuition is that if I go exchange-traded, I have less chances to get ripped-off as the price is "fairly" determined by the supply and demand law than if I go OTC. But in this case, why would vanilla options be traded OTC as well? Are they cheaper when being traded OTC (or different fees as well)?