CME opts for European-style options

The switch to European-style options will begin in December and is a reaction to customer demand, a CME spokesman told RiskNews. Unlike American-style instruments, European-style options can only be exercised on expiration. This feature can be more appealing to options sellers – giving them certainty about the lifetime of their positions.

European options tend to price at a discount to American options because the premium related to early exercise is absent.

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