   
|
|
|
|
American-style Option
|
An American-style option is a put or call option that may be exercised on or before its expiration date. The American-style option is more difficult to price than otherwise identical European-style option because the later, unlike the American-style option, can only be exercised at maturity. Numerical methods are used to get an approximate value of an American-style option when no analytic formula exists. An American-style option can be traded on a European exchange, and vice versa. The volume of American-style options traded every business day is enormous, as most exchange-traded options are American-style options. The first American-style option contracts had publicly traded stocks as the underlying asset. Today the American-style option is traded not only for stocks, but other assets, such as indices and futures.
Rate this American-style option definition...
|
|
Where is the market headed? The answer may surprise you. Find out
right now with the exclusive & Barron's recommended charts of Chart of the Day.
|
Popular Terms: EBITDA, liquidity ratio, 401a, deferred tax, command economy, 144a, per diem, margin rate, deferred revenue, required rate of return, cancelled check, open position, stock split, ex-dividend, implied volatility, in escrow, irrevocable trust, limit order, quality assurance, risk management, 1035 exchange, Key Rate Duration, class C shares, current ratio, Zero Cost Collar, 1031 exchange, wholly-owned subsidiary, VIX, reverse mortgage, retained earnings, phantom income, option premium, minority interest, labor relations, ex-dividend date, covered put, real GDP, LIBOR, inflation, dividends payable, diluted share, debt service coverage, balance sheet, APR, equities, average price per share, FICO score, FTSE, stock market close
|
|
|
|
