How Does the Cost of Carry Influence the Early Exercise Decision? ▴ Learn

How Does the Cost of Carry Influence the Early Exercise Decision?

The cost of carry includes the financing cost of holding the underlying asset and any income generated (like dividends). A high cost of carry for the underlying can make early exercise more appealing for a put option, while a high income yield (not common in crypto) can make early exercise of a call option rational.

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