European options
European options are financial contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on a specific future date, known as the expiration date. Unlike American options, which can be exercised at any time before expiration, European options can only be exercised on that set date. They are commonly used in financial markets for trading stocks, indices, or other assets, allowing investors to speculate on price movements or hedge against potential losses.
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European options are a type of financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on a specified expiration date. Unlike American options, which can be exercised anytime before expiration, European options can only be exercised on that specific date. This characteristic often makes them simpler to price and trade. Investors use them to hedge risks or speculate on the future price movements of stocks, commodities, or other assets, making them a popular choice in financial markets.