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Finance Dictionary and Glossary of Investment Terms
American option
Definition 1.
An option that may be exercised at any time up to and including the expiration date. Related: European option
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Definition 2.
An option which can be exercised at any time between the purchase date and the expiration date. Most options in the U.S. are of this type. This is the opposite of a European-style option, which can only be exercised on the date of expiration. Since an American option provides an investor with a greater degree of flexibility than a European style option, the premium for an American style option is at least equal to or higher than the premium for a European-style option which otherwise has all the same features. also called American-style option.
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Definition 3.
An option that can be exercised anytime during its life.
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