Definition
An American-style option gives the holder the right to exercise at any point before or on the expiration date. Most stock options in the U.S. are American-style. This flexibility makes American options worth at least as much as equivalent European options, though early exercise is rarely optimal.
Example
You hold an American call option expiring in 3 months. You can exercise it today, next week, or anytime until expiration.
FAQ
What is American Option?
An option that can be exercised any time before expiration.
Why is American Option important?
American Option helps investors evaluate options and make more informed decisions.