American-style option

American-style option

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.

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-style option.

A listed option that you can exercise at any point between the day you purchase it and its expiration date is called an American-style option. All equity options are American style, no matter where the exchange on which they trade is located.

In contrast, you can exercise European-style options only on the last trading day before the expiration date, not before. Index options listed on various US exchanges may be either American- or European-style options.

References in periodicals archive ?
Finally, Chapter 8 provides an overview and explanation of the most recent developments in the numerical methods used to price and value American-style option agreements.
Fixed rates give you peace of mind - particularly if they incorporate an American-style option to re-mortgage into a cheaper one, with a minimal penalty, whenever interest rates fall.
The problem considered is the computation of the value of an American-style option in a stochastic volatility setting.
The RGGI options contract, with contract code OR, will be an American-style option that exercises into the underlying RGGI futures contract.
The American-style options will be offered in two months in the March Quarterly Cycle, and the European-style options will be offered in two serial months.
Gasoil Outright - ICE Low Sulphur Gasoil American-Style Options (ULS)
Mathematical aspects and types of American-style options appear in the appendices.
ICE also announced the introduction onICE Futures Europeof American-style options on futures for Heating Oil and RBOB Gasoline.
These are American-style options, which the holder may exercise at any time.
The American-style options can be exercised by the holder from and including the first business day following the day a position has been initiated up to and excluding the expiration date, during a trading session.
Cassidy also said that most recently the Company added American-style options on OPEX.
American-style options on natural gas (ON), RBOB gasoline (OB), heating oil (OH), will be available to trade on OPEX on May 7, 2007.

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