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Why Might an Institutional Trader Prefer a Bermuda Option over an American or European One?

Bermuda options offer a balance of flexibility and simplicity, allowing exercise at strategic, predetermined dates.
Greeks.Live04.11.25

Why Might an Institutional Trader Prefer a Bermuda Option over an American or European One?

An institutional trader might prefer a Bermuda option because it offers a balance between the simplicity of European options and the flexibility of American options. It allows them to manage risk and potentially exercise at predetermined, strategic points (e.g. quarterly) while simplifying the pricing and hedging compared to the continuous monitoring required for an American option.

Why Might a Simple European Option Contract Be Better Suited to Immutability?
Why Might an American Option Have a Higher Premium than a Comparable European Option?
Why Do Buyers of Options Prefer High Implied Volatility after They Have Purchased the Option?
Why Might an American Option Have a Higher Premium than a European Option?

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