European Option Risk

Any insight on maintaining adequate risk levels on European Style Options from the sell side? (looking at Verticals). Thanks.

 

Same as American but easier: don't have to worry about physical assignment early.

 

1) With European-style options, deep-in-the-money strike prices might sometimes appear to trade at a "discount" to "fair value", with respect to an American-style option, because of the inability to exercise early.
2) Some of the other "rocket scientists" in the forum may want to chime in on that "quirk".

 

Thanks to both of you for the replies. I was under the impression that I could not adjust my positions prior to expiration which I just found that is wrong according to thinkorswim.

 

you cannot exercise a European style option- they are usually cash settled anyway, but you can sell or buy them all day long -I trade UK options on the ftse index and sometimes take swing trades for 3-7 days-you can do whatever you like with zero risk of assignment or exercise-no idea why people trade stock options-you really need to be right on those puppies and most people fool themselves into thinking they are doing ok- there are only a few share options traded in the UK -it's a loser's game as sooner or later you get destroyed because the company lied about its profits