Finance · Financial Derivatives
Identify the key technical distinction between European-style and American-style options.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1European options can be exercised at any pre-specified dates prior to expiration under all contract formats.
- 2American options can be exercised at any time up to and including expiration, while European options can only be exercised at expiration.✓
- 3American options can only be exercised on the final expiration date.
- 4European options are inherently more expensive because they offer greater exercise flexibility.
Correct answer
American options can be exercised at any time up to and including expiration, while European options can only be exercised at expiration.
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