Most equity options are traded on options exchanges, and many are multiply listed, meaning they're available on more than one exchange. Because contracts with the same terms are fungible, or interchangeable, you can buy an option on one exchange and sell it on another to take advantage of the best price. In general, though, you don't know where the transaction takes place because your brokerage firm and the exchange computers complete the trade.
In the Hands of the OCC
The Options Clearing Corporation (OCC) guarantees all option contracts, though you'll go through your brokerage firm to place an order. The OCC is jointly owned by all of the exchanges that trade options and is overseen by the Securities and Exchange Commission (SEC), the federal agency that governs the securities industry. The OCC is the actual buyer and seller of every option, and guarantees all contracts in order to eliminate counterparty risk. That's the risk that one party to a trade won't fulfill its side of the bargain.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options (available at your local Scottrade branch office or from the Options Clearing Corporation at 1-888-OPTIONS or by visiting www.888options.com). All option accounts require prior approval by Scottrade. Market volatility, volume, and system availability may impact account access and trade execution. Supporting documentation for any claims will be supplied upon request.