American option


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Related to American option: Bermudan option

American option

An option that may be exercised at any time up to and including the expiration date. Related: European option

American Option

An option contract that may be exercised at any time on or before the expiration date. For example, if one buys an American call giving him/her the right to buy shares in X expiring on the final Friday in March, the call may be exercised at any time on or before the final Friday in March. The differentiating feature of an American option is the fact that its value varies according to the value of the underlying asset over the life of the contract. This means that a holder may wait for an advantageous price and exercise the option. This contrasts with a European-style option, which may only be exercised on the expiration date.

American option

A put or call option that permits the owner to exercise the option at any time on or before the expiration date.
References in periodicals archive ?
To the best of our knowledge, IMEX-PC methods have not been used to price financing options, except in [37] where a second-order IMEX-PC scheme is used to price American options.
At each date, IV is chosen to minimize the unweighted sum of squared deviations of Baronep-Adesi and Whaley's (1987) formula for pricing American options on futures with the actual settlement prices for the two nearest-to-the-money call options and two nearest-to-the-money put options for the appropriate futures contract.
The Philadelphia Stock Exchange currently trades both European and American options.
The option to transfer funds is like an American option that could be exercised at any time the policyholder believes it is in his interest.
Bunch and Johnson [5] modified the Geske and Johnson [11] approach to approximate the American option values, using only the value of a European option ([P.
For example, Evnine and Rudd (1985) use intraday data for a two-month period in 1984 and find frequent violations of boundary conditions and put-call parity for S&P 100 and Major Market index options, both of which are American options.
The next section further discusses the American option element of the interest rate guarantee.
Courtadon, 1987, Tests of American Option Pricing Models in the Foreign Exchange Markets, Journal of Financial and Quantitative Analysis, 22: 153-167.
Second, one must keep in mind that, as with American options, the surrender option on a policy has a greater value than the supremum of the values of the corresponding European option for different possible exercise dates.
Nevertheless, in other markets, the Black-Scholes formulas for European options are widely used as approximations to prices of American options.
Designed to meet the unique position, risk and operations management requirements of physical oil professionals, ASPect office supports a wide range of deal types, including: physical, future, EFP, swap, European option, American Option and Open spec.
My article about economic integration and American options for Russia's aggressive moves in Ukraine brought reactions from a Worcester entrepreneur with friends in Russia as well as from a Silicon Valley venture capitalist.

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