What is EUROPEAN OPTION?

Expiration-date execution is the defining characteristic of this type of option. Contrast to an American option; execution can occur any time before and on expiration date. The average price of the underlying asset as on a specific date dictates the payoff for both a European and an American option. Contrast this to determining average price over a period for an Asian option. Geography has nothing to do with the names of these options. Known also as European-style option.

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