AMERICAN v/s EUROPEAN OPTIONS
The definitions of options, both call and put, given above apply to the American-style options.
An American option can be exercised by its owner at any time on or before the expiration date.
Besides the American type there are European-style options as well.
In case of European options, the owner can exercise his right only on the expiration date and not before it.
It may be pointed out however, that most of the options traded in the world, including those in Europe, are of the American style.
The definitions of options, both call and put, given above apply to the American-style options.
An American option can be exercised by its owner at any time on or before the expiration date.
Besides the American type there are European-style options as well.
In case of European options, the owner can exercise his right only on the expiration date and not before it.
It may be pointed out however, that most of the options traded in the world, including those in Europe, are of the American style.