InvestorQ : What are Indian options European options or American options?
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Neelam Naik made post

What are Indian options European options or American options?

Answer
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Dia Deshpande answered.
2 years ago


Before understanding European and American call option, let us first understand exercise of call option. When you buy a call option, you have two choices in front of you. Either you can reverse a call option (sell if you have bought it and buy if you have sold it) in the market or you can go to the exchange and exercise the call option.

An option that can only be exercised on the settlement date is called a European option while an American option can be exercised on or before the settlement date. In the past, stock options were American while Index options were European. Effective 2011, all options have shifted to being European options only. There are no American options as the devolvement risk was distorting the pricing of options.