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Basics of Options (Derivatives) - Types of Options Options come in 2 different types, namely: 1) American Options American Options can be exercised at any time between the date of acquiring the options till the expiry date, upon which the Options become worthless (if not exercised). The example of Cocoa Corp. we used in the Basics of Options (Derivatives) - How Options Work tutorial is an example of an American Option where the option was exercised at many intervals before the expiry date. 2) European Options European Options can only be exercised upon the
end of their lives (upon their expiry dates). Long Term Options The American and European Options we talked about above are both short-term Options where the expiry date is within 1 year. However, Long Term Options are available for long term investors where the expiry date expands to multiple years, even 2-3 years sometimes. These Options are also known as Long Term Equity Anticipation Securities (LEAPS). Exotic Options Options that have Calls and Puts are known as Exotic Options. |
