American Option
An option you can exercise any trading day up to expiry — the style of NSE stock options.
Definition
An American option is an option contract that the holder can exercise at any point up to and including the expiry date. This early-exercise flexibility distinguishes it from a European option, which can be exercised only at expiry. In Indian markets, NSE single-stock options are American-style.
Why it matters
Early exercise creates assignment risk for option writers: a short call or put can be assigned before expiry, often around dividend dates for deep in-the-money calls. Because of this optionality, American options can carry a small valuation premium over otherwise identical European options and require lattice or binomial pricing rather than plain Black-Scholes.
Example
You write (sell) a Reliance 2,800 call. With the stock deep in the money before an ex-dividend date, the holder exercises early to capture the dividend. As the writer, you are assigned: you must deliver the shares (or settle) ahead of expiry rather than waiting for the final day.
See it live
Compare American-style stock options against European index options on TradePulse's live option chain.