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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
This market tends to be fairly one-sided, so in many cases, the banks end up buying the American-style option. Then they have to define and find the other side of that transaction.
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.
An American-style option. With the components introduced in Section 3, we now solve an LCP problem from American-style options with stochastic volatility.
Linear complementarity problems arise from so-called American-style options. A 2D convection-diffusion type operator is discretized with the help of second order upwind discretizations.
Mathematical aspects and types of American-style options appear in the appendices.

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