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What is European and American Options, and how do they differ from each other ?

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What is European and American Options, and how do they differ from each other ?
posted Jul 4, 2017 by Deepika Jain

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The key difference between American and European options relates to when the options can be exercised:

  • A European option may be exercised only at the expiry date of the option, i.e. at a single pre-defined point in time.
  • An American option on the other hand may be exercised at any time before the expiry date.

This is why American options are in general more expensive because the are exercisable any time.

answer Jul 4, 2017 by Debolina Charaborthy
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