Investments, tenth edition

20.1 

  American and European Options 

 An     American  option    allows its holder to exercise the right to purchase (if a call) or sell (if 

a put) the underlying asset on  or before  the expiration date.    European  options    allow for 

exercise of the option only on the expiration date. American options, because they allow 

more leeway than their European counterparts, generally will be more valuable. Virtually 

all traded options in the United States are American style. Foreign currency options and 

stock index options are notable exceptions to this rule, however.