Options mechanics
American vs. European Options
Exercise styles describing when a contract may be exercised.
What American vs. European Options Means
American-style options can generally be exercised through expiration; European-style options only at expiration. The labels do not identify geography.
How to Read the Result
An American-style equity call may be exercised early; a European-style index option cannot be exercised before expiration.
Limitations
- Broker deadlines can precede exchange deadlines.
- Settlement conventions vary.
- Early exercise is not always economical.
Common Questions
Are all US-listed options American-style?
No. Many equity options are, while various index options use European exercise.
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