Definition
A European-style option can only be exercised on the expiration date, not before. Index options like SPX are typically European-style. This restriction simplifies pricing and eliminates early assignment risk, making them popular for certain trading strategies.
Example
SPX index options are European-style. Even if your option is deeply ITM, you cannot exercise until the expiration date.
FAQ
What is European Option?
An option that can only be exercised at expiration.
Why is European Option important?
European Option helps investors evaluate options and make more informed decisions.