What Is the Difference between an American and European Style Option in the Context of Crypto Derivatives?

The key difference lies in the exercise rights. An American style option can be exercised by the holder at any time up to and including the expiration date.

A European style option can only be exercised on the expiration date. In crypto derivatives, European options are more common due to their simpler pricing models and reduced counterparty risk.

The American style's flexibility gives it a slightly higher theoretical value, which must be considered when comparing options contracts.