What Is the Primary Difference between a European and American Option in the Crypto Derivatives Context?

The primary difference lies in the exercise rights. A European option can only be exercised at its expiration date.

An American option, however, grants the holder the right to exercise at any time up to and including the expiration date. In crypto derivatives, most options are European-style for simplicity and ease of pricing.

The early exercise feature of American options makes them more complex to value, generally leading to a higher premium.