American-Style Option - Revision history

User at 21:57, 25 April 2022

2022-04-25T21:57:16Z

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User: American-style option or American Option is an option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded equity options are American style.

2018-11-29T01:21:19Z

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American-style option or American Option is an option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded equity options are American style. All equity options are American style, no matter where the exchange on which they trade is located.<ref>Definiion - What is American-style option [http://financial-dictionary.thefreedictionary.com/American-style+option The Free Dictionary]</ref>

American options allow the holder to buy or sell a specified underlying asset, on or before a predetermined expiration date. Since investors have the freedom to exercise their American options at any point during the life of the contract, they are more valuable than European options, which can only be exercised at maturity. The last day to exercise a weekly American option is normally on the Friday of the week in which the option contract expires. Conversely, the last day to exercise a monthly American option is normally the third Friday of the month. Note that the name of this option style has nothing to do with the geographic location.<ref>BREAKING DOWN 'American Option' [http://www.investopedia.com/terms/a/americanoption.asp investopedia]</ref>

With an American option, the holder can wait for the most advantageous price to exercise the option. He can exercise the option on any of the trading days up to the expiration date. Due to greater flexibility, American options are more valuable than European-style options, which can only be exercised at maturity.<ref>American Option - Why it Matters [http://www.investinganswers.com/financial-dictionary/optionsderivatives/american-option-2124 Investing Answers]</ref>

===References===
<references />

===Further Reading===
*Option Exercise & Assignment Explained: The Options & Futures Guide [http://www.theoptionsguide.com/exercise-and-assignment.aspx The Options Guide]
*Why are American-style options worth more than European-style options? [http://money.stackexchange.com/questions/5161/why-are-american-style-options-worth-more-than-european-style-options StackExchange]
*Understanding Equity Options - The Options Clearing Corporation [http://www.optionsclearing.com/components/docs/about/publications/understanding_equity_options.pdf Options Clearing]

===CIO Desk Reference===
(Relevant content on this topic in the CIO Toolkit on CIO Index)

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	*Why are American-style options worth more than European-style options? [http://money.stackexchange.com/questions/5161/why-are-american-style-options-worth-more-than-european-style-options StackExchange]		*Why are American-style options worth more than European-style options? [http://money.stackexchange.com/questions/5161/why-are-american-style-options-worth-more-than-european-style-options StackExchange]
	*Understanding Equity Options - The Options Clearing Corporation [http://www.optionsclearing.com/components/docs/about/publications/understanding_equity_options.pdf Options Clearing]		*Understanding Equity Options - The Options Clearing Corporation [http://www.optionsclearing.com/components/docs/about/publications/understanding_equity_options.pdf Options Clearing]
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−	~~===CIO Desk Reference===~~
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 American-style option or American Option is an option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded equity options are American style. All equity options are American style, no matter where the exchange on which they trade is located.<ref>Definiion - What is American-style option [http://financial-dictionary.thefreedictionary.com/American-style+option The Free Dictionary]</ref>
-American options allow the holder to buy or sell a specified underlying asset, on or before a predetermined expiration date. Since investors have the freedom to exercise their American options at any point during the life of the contract, they are more valuable than European options, which can only be exercised at maturity. The last day to exercise a weekly American option is normally on the Friday of the week in which the option contract expires. Conversely, the last day to exercise a monthly American option is normally the third Friday of the month. Note that the name of this option style has nothing to do with the geographic location.<ref>BREAKING DOWN 'American Option' [http://www.investopedia.com/terms/a/americanoption.asp investopedia]</ref>
+American options allow the holder to buy or sell a specified underlying [[asset]], on or before a predetermined expiration date. Since investors have the freedom to exercise their American options at any point during the life of the contract, they are more valuable than European options, which can only be exercised at maturity. The last day to exercise a weekly American option is normally on the Friday of the week in which the option contract expires. Conversely, the last day to exercise a monthly American option is normally the third Friday of the month. Note that the name of this option style has nothing to do with the geographic location.<ref>BREAKING DOWN 'American Option' [http://www.investopedia.com/terms/a/americanoption.asp investopedia]</ref>
-With an American option, the holder can wait for the most advantageous price to exercise the option. He can exercise the option on any of the trading days up to the expiration date. Due to greater flexibility, American options are more valuable than European-style options, which can only be exercised at maturity.<ref>American Option - Why it Matters [http://www.investinganswers.com/financial-dictionary/optionsderivatives/american-option-2124 Investing Answers]</ref>
+With an American option, the holder can wait for the most advantageous [[price]] to exercise the option. He can exercise the option on any of the trading days up to the expiration date. Due to greater flexibility, American options are more valuable than European-style options, which can only be exercised at maturity.<ref>American Option - Why it Matters [http://www.investinganswers.com/financial-dictionary/optionsderivatives/american-option-2124 Investing Answers]</ref>