Define the Term 'Optimal Exercise Boundary' in Options Pricing ⎊ Path

Define the Term ‘Optimal Exercise Boundary’ in Options Pricing.

The optimal exercise boundary is the set of underlying asset prices and times at which it becomes financially rational for the holder of an American option to exercise the option early. It is the critical price level that separates the region where holding the option is better from the region where immediate exercise is better.

Under What Conditions Is It Never Optimal to Exercise an American Call Option Early?

Does the Early Exercise Rule Apply Equally to American-Style Put Options?

Can an American Option Ever Be Optimal to Exercise Early?

How Does the Potential for Early Exercise Affect the Time Value of an American Option?

What Role Does the Strike Price Play in Determining the Optimal Early Exercise Time?

What Is the Opportunity Cost of Exercising a Deep In-the-Money American Call Option Early?

Why Is Early Exercise Generally Not Optimal for an American Call Option on a Non-Dividend-Paying Asset?

How Does the Early Exercise Boundary for a Put Option Change as Expiration Approaches?

Glossar

Exercise Boundary

Trigger ⎊ The exercise boundary, within cryptocurrency options and derivatives, defines the price level at which an option transitions from being out-of-the-money to in-the-money, initiating potential exercise or assignment.