Otavio is out of contract at the Estadio do Dragao in the summer and is expected to depart Porto on a free transfer.
His contractual status makes him an attractive option for a number of clubs and AC Milan have been holding talks with his agent in a bid to reach an agreement.
They have not yet met his agent’s demands and, according to Italian broadcaster Sportitalia, Leicester are still in the mix for Otavio, along with Napoli, Roma and Juventus.
Otavio wants wages of €3m per year, but AC Milan have so far offered €2.2m.
The Porto man has had an offer from the Middle East which is worth €4.5m per year, but his agent is still shopping for alternative destinations.
Porto snapped up the Brazilian schemer from Internacional in 2014 and sent him out on a loan stint at Vitoria Giumaraes.
He helped Porto to secure the Portuguese title and the Portuguese Cup last term.