Understanding the Difference: European vs. American Style Options

American Versus European Style Options

European and American style options are not regional options. They are actually terms used to describe two different types of option exercise.

European Style Options: can be exercised only at expiration.

American Style Options: can be exercised at any time prior to expiration.

The majority of CME Group options on futures are European style and can be exercised only at expiration. Some of the notable exceptions that have American style expiration are the quarterly options on the S&P500 futures contracts, SOFR options, and Treasury options.

Even though most CME Group options are European-style and can be exercised only at expiration, it is important for traders to understand style of option they are interested in trading.

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