Need to answer for school 1) Which of the following best describes an American option? a) An option exercisable at any time up to its expiry date b) An option on a US stock or bond c) An option exercised only at expiry d) An option traded on US exchange 2) Which of the following is true of a European call option? a) The buyer has the right to buy the underlying up to the maturity day b) The seller may be obliged to sell the underlying only at maturity c) The seller is obliged to buy the underlying only at maturity d) The buyer will exercise his option when it is in-the-money Can you also explane , so I can understand it THANE YOU!
American options can be EXERCISED on or before the date of maturity. The answer to Question 1 is 'A'. European options cannot be exercised except ON THE DATE OF MATURITY. The answer to Question 2 is 'B'.