European Option

A European option is an option that can be exercised only on the expiration date i.e  the last day till which the option is valid. Generally, they are traded at a discount to their American counterpart since there is only a single opportunity to exercise the option while the American option can be exercised at anytime before the expiration date. A European option gives the owner the right and not the obligation to buy or sell the underlying asset at the strike price and on its expiration date.