Derivatives

American Option

Definition

What is American Option?

An option exercisable at any time up to and including expiration.

Example in practice

A dividend may make early exercise of an American call relevant.

Keep learning

A contract whose value depends on an underlying asset, rate, index, or event.

The asset, rate, index, or reference on which a derivative's value is based.

The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.

A strategy that owns the underlying asset and sells call options against it.

Think you know your investing terms?

Put your knowledge to the test with a quick quiz.