Why Is Early Exercise of a Call Option Generally Sub-Optimal?

Early exercise of a call option is generally sub-optimal because it means forfeiting the option's remaining time value. By exercising, the holder receives only the intrinsic value and loses the potential for the option to gain more value before expiration.

Additionally, holding the option allows the holder to keep the cash that would be used to purchase the stock, earning interest until expiration. The only common exception is for an American call on a stock with an impending, large dividend payment.