What is the difference between American and European style options?

If you would like to trade in options, it is important to know the difference between the two styles of options: American and European.

The main difference between these two, is the ability to exercise the option before the expiration date. Where American options can be exercised at any time, European options can only be exercised on the expiration date.

For a detailed explanation of options, including more information on the differences between these two styles, please see 'What are options?'.