| Lesson 4- Option Styles |
|
Option Styles refer to the type of exercise that can take place by the buyer of the option contract. There are two types of styles that an investor needs to be concerned with: American-StyleAmerican-style options allow the option buyer to exercise the option contract at ANY TIME before expiration.European-StyleEuropean-style options allow the option buyer to exercise the option contract ONLY on the last trading day before expiration.A majority of option contracts are American-style. ALL U.S. equity option contracts are American-style. European-style option contracts include cash-settled indexes ($SPX, $DJI) and some Exchange-Traded Funds (ETFs). |