When Is an American-Style Put Option Most Likely to Be Exercised Early? ▴ Learn

When Is an American-Style Put Option Most Likely to Be Exercised Early?

An American-style put option is most likely to be exercised early when the underlying asset's price is very low (deep-in-the-money) and the interest rate or funding rate is high. Exercising early allows the holder to receive the strike price cash immediately, which can then be reinvested to earn interest, outweighing the remaining time value of the option.

Does the Early Exercise Rule Apply Equally to American-Style Put Options?

How Does a ‘European’ Style Option Restrict the Exercise Relative to an ‘American’ Style Option?

How Does the Interest Rate Environment Affect the Decision to Early Exercise a Put Option?

What Is the Difference between American-Style and European-Style Options?