Question

All else equal, which is worth more?
A American option
B European option

Answer 1

An American option (option A) is generally worth more than a European option, all else being equal.

Step-by-step explanation:

When comparing an American option to a European option, all else being equal, the American option is generally worth more.

An American option gives the holder the right to exercise the option at any time before the expiration date, while a European option can only be exercised on the expiration date. This added flexibility of the American option makes it more valuable, as it allows the holder to potentially capture favorable price movements in the underlying asset.

For example, if the price of the underlying asset increases significantly before the expiration date, the holder of an American option can exercise early and capture the profit. However, the holder of a European option would have to wait until the expiration date to exercise.