There are two different styles of options contracts, named after the regions where they are most often traded. They are European style and US (American) style options, and the difference in style can make a big difference to the way in which they are traded.
Expiration Difference
The difference is that European style options can only be exercised on the expiration date, whereas US style options can be exercised at any time up to and including the expiration date. This means that a European style options needs to be in the money (in profit) on the expiration date, but a US style option only needs to be in the money at any time up to the expiration date. Only the exercising of the option is affected, so both European and US style options can be bought and sold at any time.
Popular European and US Style Options
Some popular European style options are :
- DAX cash options
- SMI cash options
- FTSE100 cash options
and some popular US style options are :
- YM Dow Jones cash options
- ZG Gold 100 Troy Ounce futures options
- EUR futures options