FX Option Trading: Basics and Strategies | Episode 3: Indicators to Measure Premium Volatility [Naomori Ōnishi]
Profile of Yohei Onishi
Financial journalist. After working for a publisher, he became independent in 1995 and has contributed articles focused on finance and economy to money magazines, business magazines, and weekly magazines. He has conducted numerous interviews with analysts and strategists on the front lines of the market, as well as top executives of listed companies. He is proficient in FX and financial trading in general.
Exercise rules differ by type
Until now I have explained how options trading works in two installments, and this time I will touch on their types. First, options can be broadly classified into “American type” and “European type.” The difference between the two lies in the rules for exercising the rights.
American-type options can be exercised at any time before the expiration date. In contrast, European-type options can be exercised only on the expiration date. In other words, American-type provides more flexibility. For this reason, the premium tends to be higher compared with European-type.
