Does the Early Exercise Feature of an American Option Create a Significant Arbitrage Opportunity?

The early exercise feature itself does not typically create a risk-free arbitrage opportunity. It means the American option is theoretically worth at least as much as its European counterpart, and often more.

Arbitrage arises from mispricing relative to the theoretical value. The primary value of the early exercise is strategic, such as exercising a deep in-the-money American call just before a major altcoin network upgrade to capture the underlying asset without further premium decay.