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How Does the Exercise Style Affect the Option Premium?

American options have a higher premium due to the added value of the right to exercise at any time before expiration.
Greeks.Live22.11.25

How Does the Exercise Style Affect the Option Premium?

The exercise style directly impacts the option premium. American options, due to the flexibility of being exercised at any time, are generally priced higher than comparable European options.

This additional premium reflects the value of the early exercise right. European options, having a more restricted exercise window, are typically cheaper.

What Is the Difference between American-Style and European-Style Options?
What Is the Difference between American and European Style Options Exercise?
Why Do American Options Typically Have a Higher Premium than European Options?
How Does a ‘European’ Style Option Restrict the Exercise Relative to an ‘American’ Style Option?

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