A European option is an option that:
A) is only traded on European exchanges
B) is only traded on LIFFE
C) can only be exercised on the expiry date
D) is only issued by European companies

Question

Quizplus · Accepted Answer

A European option is characterized by the fact that it can only be exercised on the expiry date, unlike American options which can be exercised at any time before the expiry date. The other options (A, B, D) are incorrect because the definition of a European option is not related to the geographic location of the exchange, a specific exchange, or the nationality of the issuing company.

A European Option Is an Option That