What Is the Primary Difference between a ‘European’ and an ‘American’ Style Option?

The primary difference lies in the exercise rights granted to the holder. An American-style option can be exercised by the holder at any time between the purchase date and the expiration date.

A European-style option, however, can only be exercised on the expiration date itself. This difference in flexibility means American options are typically more valuable than their European counterparts, all else being equal.