Derivatives
European Option
Definition
What is European Option?
An option exercisable only on its expiration dateThe date on which a derivative contract expires or must be settled..
Example in practice
How This Looks in Practice
The holder cannot exerciseThe use of an option holder's contractual right to buy or sell the underlying asset. the European option early.
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Related Terms
Derivatives
Derivative
A contract whose value depends on an underlying asset, rate, index, or event.
DerivativesUnderlying Asset
The asset, rate, index, or reference on which a derivative's value is based.
DerivativesNotional Amount
The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.
Derivatives StrategiesCovered Call
A strategy that owns the underlying asset and sells call options against it.