European-style option
An option that can only be exercised on the expiry date.
How to read the number
The seller knows the single day on which the obligation will either arise or vanish, so the risk can be planned by the calendar.
When the metric lies
A gain that appears earlier cannot be locked in by exercising. Before expiry the right is realised only by selling the option, and its market price differs from intrinsic value.
Also known as: European exercise