What it is:
How it works (Example):
Suppose an investor buys a Europeanasset rises above the strike price. The holder of the European option is unable to take advantage of this momentary opportunity to lock in a profit since the only date he can exercise this is on its .on March 1st that expires on the third Friday in March. During the second week of March, the value of the underlying
Why it Matters:
European options usually trade at a discount to their American counterparts since there is only a single opportunity to exercise the option. If the holder of the European option doesn’t want to wait until the expiration date, he must close his position by selling the option. These options trade mainly over the counter and are rarely seen on the major exchanges.