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Quantitative Finance · Begrippenlijst

Wat is American and European exercise?

Ook bekend als: American exercise · European exercise

Definition 23.3 Markets I: The Ecosystem and Exchange-Traded Markets · Hoofdstuk 23 — Option Contracts and the Options Exchanges

An option with American exercise can be exercised on any business day up to expiry; one with European exercise only at expiry. US options on shares and funds are American and settle by delivery of the shares; the large index options are European and settle in cash.

P&L at expiry, premium included. The buyer’s loss is limited to the premium; the writer’s gain is. The two lines of each panel add to zero: options redistribute, they do not create. Data: the chapter’s build.
Figure 23.1. P&L at expiry, premium included. The buyer’s loss is limited to the premium; the writer’s gain is. The two lines of each panel add to zero: options redistribute, they do not create. Data: the chapter’s build.
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