European Options


What are European Options?

European options are the options that cannot be retired before maturity. The only difference between an American option and a European option is that the American Option can be exercised early; American options can always be used to replicate their corresponding European options simply by choosing not to exercise them until expiration.

Why are European Options important?

The risk managers choose between the American Options and the European Options as the available options for Hedging. Hence, it is critical to know the concepts of the European Option.

Topics: ACCA, CIMA, CPD, AAT, FRM