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Does the Presence of High Interest Rates Increase or Decrease the Value of the Early Exercise Feature?

High interest rates decrease the value of early exercise for calls (better to hold cash) but increase it for puts.
Greeks.Live14.11.25

Does the Presence of High Interest Rates Increase or Decrease the Value of the Early Exercise Feature?

High interest rates generally decrease the value of the early exercise feature for a call option. This is because delaying the exercise allows the holder to keep the cash (the strike price) invested for a longer time, earning more interest.

For put options, high interest rates increase the value of the early exercise feature.

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